Sell Indian Bank; target of Rs 145: SPA Research

Indian Bank reported good set of numbers with strong operational performance and stable asset quality. NII increased by 10.4% YoY to INR 12.36bn and net profit increased by 42.8% YoY to INR 3.07bn due to 18% increase in other income and flat provisioning. Credit growth was muted at 1.7%. The bank has guided for advances growth of 10-12%, NIM of 2.6% and RoA of 0.7-0.8% for FY17. The bank has also initiated lateral hiring process for retail and MSME vertical. While Indian bank continues to be our preferred stock among PSBs due to its strong operating performance and comfortable capital adequacy, due to recent rally in the stock, we change our recommendation to SELL with revised TP of INR 145 (earlier INR 126), based on 0.7x FY18E ABV.

With stability at top management level, we expect bank to continue its focus on improving CASA, increasing fee income and leveraging IT strength, which should provide granularity to its asset as well as liability side. While Indian bank continues to be our preferred stock among PSBs due to its strong operating performance and comfortable capital adequacy, due to recent rally in the stock, we change our recommendation to SELL with revised TP of INR 145 (earlier INR 126), based on 0.7x FY18E ABV. For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.