Hold Indian Bank, target price Rs 70: Emkay Global

Emkay Global has given a hold rating to Indian Bank with a target price of Rs 70. The share price moved down by 1.05 per cent from its previous close of Rs 62. The stock’s last traded price is Rs 61.35.

Indian Bank, incorporated in the year 1907, is a banking company (having a market cap of Rs 6923.02 Crore).

Financials
The Bank has reported a Gross Non Performing Assets (Gross NPAs) of Rs 36223.13 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 10052.22 Crore (.00% of total assets). For the quarter ended 30-09-2020, the company reported a Consolidated Interest Income of Rs 7148.09 Crore, down -.01 % from last quarter Interest Income of Rs 7149.07 Crore and up 78.96 % from last year same quarter Interest Income of Rs 3994.14 Crore. The bank reported net profit after tax of Rs 424.15 Crore in latest quarter.

Investment Rationale
The brokerage has raised earnings estimates for FY21 mainly due to a better margin trajectory, treasury gains and contained provisions. It expects the bank’s RoA at 0.2% in FY21E, which should improve to 0.3% by FY23E. It retains Hold with a TP of Rs70 (based on 0.4x Sep FY22E ABV). Key risks to the call: Slower growth, prolonged integration process with Allahabad Bank and higher-than-expected corporate/SME NPAs.

Promoter/FII Holdings
Promoters held 88.1 per cent stake in the company as of Sept 30, 2020, while FIIs held 0.8 per cent, DIIs 4 per cent and public and others 7.2 per cent