The domestic brokerage and analysis company Yes Securities examined the PSU banking area and took a comprehensive look at as many as 8 key banks in this specific area. After its analysis, the brokerage found the dissertation on Indian Bank (INBK) interesting and has initiated coverage of the bank share with a purchase rating.
“We like Indian Bank for the following reasons: (1) INBK has a superior growth profile compared to key PSU bank colleagues (2) INBK has several loan segments with good returns, whose share in the loan book may increase in the future, provides fillip to NIM (3 “Although the title’s asset quality statistics do not provide a good reading, we believe that the asset quality is at a turning point”, it was stated in the broker’s letter.
Yes Securities has assigned a BUY rating on Indian Bank shares with a price target of ₹188 pieces. The bank share has risen by more than 35% over a one-year period, while so far it has risen by about 13% in 2022 (year-to-date or YTD).
Indian Bank has shown a relatively higher growth trajectory in recent years and has grown with a 3-year growth CAGR of 6.8% during FY18-21. This growth CAGR must be seen in the context of the pandemic that limits generic loan growth. Importantly, it is the second highest CAGR in our comparison universe with eight banks, after only the State Bank of India (SBI).
“Important, by ₹852 billion Agri loans in December 2021, ₹681 billion are plant loans, of which ₹442 billion are jewelery loans, which, regardless of short-term hiccups, have a positive long-term outlook, especially in southern India, where INBK has 32% of its branches. Capital is not an obstacle for the bank, with the Common Equity Tier 1 capital ratio of 11.4% in December 2021, the second highest in our comparison universe “, added Yes Securities.
The views and recommendations above are from individual analysts or brokerage firms, and not from Mint.
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