Domestic brokerage and research firm Yes Securities examined the PSU banking sector by comprehensively looking at 8 major banks in this specific niche. Upon its analysis, the brokerage found the thesis around Indian Bank (INBK) interesting and began coverage on it. bank stock Buy rating.
“We prefer Indian Bank for the following reasons: (1) INBK has a better growth profile than major PSU bank peers (2) INBK has several loan segments with healthy yields, whose loan book share can grow further “Promoting NIM(3) headline asset quality metrics, of course, does not make for good readings, but we think asset quality is at a turnaround point,” the brokerage said in the note.
Yes Securities has given a BUY rating on the shares of Indian Bank with a price target of 188 each. The bank stock is up over 35% in the one-year period, while it has so far gained around 13% in 2022 (Year-to-date or YTD).
Indian Bank has displayed a relatively high growth trajectory in recent years, growing at a 3-year growth CAGR of 6.8 per cent in FY 18-21. This growth CAGR has to be viewed in the context of the pandemic stalling normal credit growth. Importantly, this is the second highest CAGR in our 8-bank comparison universe, after only State Bank of India (SBI).
“Importantly, the 852 billion agricultural loans by December 2021, 681 billion are crop loans, of which 442 billion jewel loans, regardless of near-term hiccups, have a positive long-term outlook, especially in South India, where INBK has 32% of its branches. Capital is not a constraint for the bank, with the CET1 ratio sitting at 11.4% as of December 2021, the second highest in our comparison universe,” Yes Securities said.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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