Macquarie has maintained an outperform rating on the stock with an unchanged target of Rs 1,800. It believes that the asset quality slippage in the bank’s Q4 is disappointing, while the net profit was in line with its estimates. The negative surprise in the results could have a bearing on the stock performance. The research firm has made minor changes to its earnings estimates.
Meanwhile, it also expects the bank to revert its trend trajectory of credit costs of 50-70 basis points (bps).
Nomura has maintained its buy rating on the scrip with a target price of Rs 1,800. The brokerage house observed that the asset quality was weaker than expected, but the operating performance for the quarter was 14 percent above estimates. The slippages and large ARC sales of standard assets were a negative surprise. Meanwhile, it highlighted that the loan growth continued to be strong at 35 percent YoY and 6 percent QoQ. There was a positive surprise by retail loans, fees and liability momentum.
Morgan Stanley is overweight on the stock with a cut in target price to Rs 1,680 from Rs 1,750. It expects the stock performance to be weak due to the uncertainty around asset quality. The material increase in impaired loans and high pace of capital consumption is a negative for the bank. Its preferred stock in the pack was IndusInd Bank.
Citi has a buy call on the stock with a target of Rs 1,800. It sees the growth momentum to be robust with retail assets and liabilities showing traction. It pointed that the management believes one-off provision is likely to be reversed soon and that it may see some increased asset quality scrutiny in the near term.
Bank of America Merrill Lynch (BofAML) has reiterated a buy call on the stock with a target at Rs 2,100. The research firm saw Q4 earnings beating estimates and that the asset quality was a short term concern. Apart from the one-off NPA, new NPL formations are largely in line with the previous few quarters, it said, adding that the provisioning coverage stood at 46.9 percent. Retail banking will drive loan growth and operating metric, it added.
JPMorgan has an overweight call on the stock with an increased target to Rs 1,875 from Rs 1,500. The stock was one of its top picks in the banking space and the loan growth spiked to 35 percent YoY with strong growth across all segments.
Deutsche Bank has a buy call on the stock with a target of Rs 1,700. Adjusting for the one-off provision, asset quality would have been stable, it said. It saw the stock reacting negatively in the near term, but sees that as a good buying opportunity.
Citi has maintained its buy call on the stock with an increased target price of Rs 1,640 from Rs 1,380. It foresaw another three years of strong growth and observed that the operational momentum and mix improvement continued.
Goldman Sachs has a neutral call on the stock with a target of Rs 1,384. It raised FY18-19 EPS by 2.3-2.6 percent on Q4 numbers.
Nomura maintained its buy call with an increased target to Rs 1,640 from Rs 1,400. The one-off Provisioning as well as ARC Sales led to higher provisioning and this should normalize in the first half of this fiscal. The brokerage house expected 25 percent EPS growth over FY17-20.
Morgan Stanley is overweight on the stock with a target of Rs 1,600. Pre-Provision Operating Profit growth stayed strong with accelerating loan growth.
Bank of America Merrill Lynch (BofAML) has reiterated a buy call with an increased target of Rs 1,600 from Rs 1,530. It said that the Q4 missed its estimates due to provision, but the asset quality was manageable. There is scope for a raise in EPS in falling rate environment. Moreover, it considered a spike in credit costs as one-of phenomenon.
JPMorgan is overweight on the stock with an increased target of Rs 1,675. Excluding one-time provision, earnings would have been a 3 percent beat, the research firm stated.
CLSA has upgraded the stock from sell to buy an increased target price to Rs 1,015 from Rs 661. It believes theat the digitization roll out in Tamil Nadu is a significant positive for the firm. It also raised the firm’s TV subscription revenues by 5-18 percent. Moreover, Arasu Cable’s provisioning licence on condition that it switches of analogue TV signals.
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