Indian Bank is one of the largest and among the better performing PSU banks in India with a total business of over ₹ 11 lakh crore.
Indian Bank reported a mixed operational performance.
Outlook on credit growth and margins remains comfortable. Moderation in credit cost is expected to be offset by normalised taxation. However, levers for further improvement in return ratio remain unclear with sustained traction to act as a re-rating catalyst.
Indian Bank is expected to deliver credit growth largely in line with industry and RoA of ~0.9% in FY25E. Thus, we value the bank at ~0.8x FY25E ABV and maintain our target price of ₹ 335 per share.
Apart from Indian Bank, in our coverage we also like SBI.
Particulars | FY20 | FY21 | FY22 | FY23 | 3 Year CAGR(FY20-FY23) | FY24E | FY25E | 2 Year CAGR (FY23-FY25E) |
---|---|---|---|---|---|---|---|---|
NII | 7,606.4 | 15,665.9 | 16,728.0 | 20,225.5 | 38.5 | 22,109.2 | 23,853.5 | 8.6 |
PPP | 6,498.0 | 11,395.6 | 12,716.9 | 15,270.5 | 33.0 | 16,556.6 | 17,694.0 | 7.6 |
PAT | 753.4 | 3,004.7 | 3,944.8 | 5,281.6 | 91.4 | 6,698.0 | 7,469.1 | 18.9 |
ABV (|) | 249.3 | 212.2 | 261.6 | 288.2 | - | 350.3 | 400.6 | - |
P/E | 24.2 | 11.2 | 9.4 | 7.1 | - | 5.6 | 5.0 | - |
P/ABV | 1.2 | 1.4 | 1.1 | 1.0 | - | 0.9 | 0.7 | - |
RoA | 0.3 | 0.5 | 0.6 | 0.8 | - | 0.9 | 0.9 | - |
RoE | 4.3 | 9.8 | 12.1 | 14.7 | - | 13.1 | 12.9 | - |
Q4FY23 | Q4FY22 | YoY (%) | Q3FY23 | QoQ (%) | Comments | ||
NII | 5,508 | 4,255 | 29.5 | 5,499 | 0.2 | Sequentiall fall in NIMs impacted growth | |
NIM (%) | 3.59 | 2.87 | 72 bps | 3.74 | -15 bps | Yields were largely flat on QoQ basis at 8.17% | |
Other Income | 1,994 | 1,573 | 26.8 | 1,716 | 16.2 | ||
Net Total Income | 7,502 | 5,828 | 28.7 | 7,216 | 4.0 | ||
Staff cost | 2,220 | 1,949 | 13.9 | 1,991 | 11.5 | Staff cost partly increased due to wage revision provision of | 251 crore. | |
Other Operating Expenses | 1,267 | 201 | 531.6 | 1,163 | 8.9 | ||
PPP | 4,016 | 2,738 | 46.7 | 4,061 | -1.1 | ||
Provision | 2,563 | 1,914 | 33.9 | 2,516 | 1.9 | Credit cost improved to 96bps vs. 141 bps in Q3FY23 | |
PBT | 1,453 | 824 | 76.3 | 1,546 | -6.0 | ||
Tax Outgo | 5.3 | -160.6 | -103.3 | 149.9 | -96.5 | ||
PAT | 1,447.3 | 984.2 | 47.0 | 1,395.8 | 3.7 | Lower tax aided earnings growth | |
Key Metrics | |||||||
GNPA | 28,179.5 | 35,214.0 | -20.0 | 29,484.0 | -4.4 | Slippage ratio jumped from 1.2% to 2.4% QoQ | |
NNPA | 4,043.1 | 8,849.0 | -54.3 | 42,710.0 | -90.5 | ||
Advances | 4,73,586.0 | 4,15,625.0 | 13.9 | 4,51,658 | 4.9 | Credit growth guidance steady at 10-12% YoY | |
Deposits | 6,21,166.0 | 5,93,618.0 | 4.6 | 5,97,114 | 4.0 |
Q4FY23 Earnings Conference Call highlights
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