Research and brokerage firm Phillip Capital has reiterated its bullishness on the shares of Indian Bank, after the public sector lender reported a 11.4% growth in profit for the quarter ended September 2017. The net profit Profit increased to Rs 451.54 crore during the quarter, compared with Rs 405.13 crore last fiscal. Phillip Capital has estimated a 38% rise earnings growth for FY-18, and 24% for FY19. “Total advances at the end of September quarter stood at Rs 1.39 lakh crore, a growth of 13.6 percent year-on-year and 7.6 percent quarter-on-quarter,” Indian Bank said in a statement.
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Net interest income during the quarter grew by 20.8% to Rs 1,543.66 crore with loan growth of 13.6% as compared to the same period a year ago. Asset quality showed improvement during the quarter under review, as gross non-performing assets (as a percentage of gross advances) were lower at 6.67%, from 7.21% in previous quarter. On similar lines, Net NPAs were lower at 3.41%, compared with 4.05% on sequential basis.
Phillip Capital has increased the target price on the shares to Rs 450 from Rs 400 earlier. Indian Bank shares were trading at Rs 362.4, down by nearly 4% since the previous close. Phillip Capital’s target price implies an upside of nearly 24% from the current market prices. Notably, the shares have returned more than 57% in the year so far, The BSE Midcap index is up by nearly 40% in the same period.
The shares have returned 32% in the last one month alone. Phillip Capital says that the bank is sufficiently capitalized to fund its near-term growth. Further, the research firm expects an FPO worth Rs 1,500-1,700 crore to trim government’s stake from 82.1% currently to 75% after that.