Emkay Global Financial has given Buy recommendation for Indian Bank with a target price of Rs. 225 in its research report issued on Jul 20, 2021

Emkay Global Financial’s report on Indian Bank

Indian Bank has benefited the most from the merger with Allahabad Bank([email protected]%) and has largely completed the integration process. It is now gearing up to accelerate growth with a strong capital buffer (CET 1 of 11.6% post recent QIP). We expect a sharp improvement in RoE to 13% by FY24E from 4% post-merger in FY20. We upgrade it to Buy with a revised TP of Rs225 (0.7x Jun’23E ABV). In Q1, the bank once again delivered a strong beat on PAT at Rs11.8bn (est. Rs7.7bn), mainly driven by better NIMs, higher other income, and tax reversal benefits from c/fwd accumulated losses. Despite higher slippages (mainly in SME), GNPA moderated further to 9.7% due to aggressive w-offs.

Outlook

We expect a sharp improvement in RoE to 13% by FY24E from 4% post-merger in FY20. We upgrade it to Buy with a revised TP of Rs225 (0.7x Jun’23E ABV).

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