Stock Broking firm ICICI Securities Limited is bullish on Dena Bank and has given ‘Strong Buy’ call for a time horizon of 12 months to get a target price of Rs 128 per share.
Market Price on Recommendation : Rs 96 on 4th May 2011
Target Price : Rs 128 per share
Time Horizon : 12 months
Potential Upside : 33%
According to the Broking firm, the investors can buy the stock on dips with a 12 months target of Rs 128. Dena Bank is PSU Bank and it wanted capital infusion from Government of India. The Government has given Rs 539 crore to bank recently and it will increase the near term growth of the bank. The broking firm analysed 23% CAGR in the business mix over FY11-13E to Rs 1,63,849 crore. For Q4FY11, the bank reported NII of Rs 471 crore and PAT of Rs 157 crore, in line with our estimates. Fresh slippages remained high in Q4FY11 at Rs 270 crore (on account of two major accounts) against Rs 202 crore in Q4FY11 and Rs 105 crore in Q3FY11. We expect 21% CAGR in PAT over FY11-13E to Rs 893 crore.
Valuations : At the CMP of Rs 96, the bank is trading at an attractive 0.9x FY13E ABV, 3.3x FY13E EPS. The bank, with visible growth, stable asset quality and NIM of 2.9% commands higher valuation multiples. We see RoA of 0.9% and RoE of 21% for FY13E. We value the bank at 1.1x FY13E ABV and arrived at a target price of Rs 128. We recommend a STRONG BUY rating on the stock at the current price.
Share’s Data :-
BSE Code : 532121
Mkt. Cap : Rs 3,273.99 Crores
Dena Bank Ltd. share’s CMP is Rs 98.20 on 6th May 2011.
Another Broking firm Angel Broking is also bullish on Dena Bank and has recommended ‘BUY’ rating on the stock with a target of Rs 121 in its 2nd May, 2011 research report.
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