Indian Overseas Bank : Strong Buy Recommendation

by khalid on 09/08/2010 · 0 comments

Indian Overseas Bank (IOB) is a major nationalized bank based in Chennai India. The bank was established in 1937 and has 2018 domestic branches and six branches overseas. Research group ICICI Direct recommends to STRONG BUY on shares of Indian Overseas Bank at present price level of Rs 116.00 for a period of 12 months.

Recommend Price : Rs 116.00
Target Price : Rs 140.00
Stop Loss : Rs 106.00
Potential Upside : 21%

Q1FY11 results of Indian Overseas Bank (IOB) is showing a sign of turnaround after last 6 troubled quarters. In this quarter NII growth showing highest both QoQ and YoY at 10% and 18% respectively. GNPA softened from 4.5% to 4.3% in this quarter with respect to last quarter of FY10. ICICI Direct expects a GNPA of 3.5% by FY12E.

Indian Overseas Bank (IOB) is trading at 0.9x FY12E ABV at CMP of Rs 116. With core business poised for growth and asset quality turnaround on the cards, ICICI Drect believe that inexpensive valuations make this stock an attractive turnaround scrip. Hence value of the stock becomes Rs 142 at 1.1x FY12E ABV and a recommendation of Strong Buy is there.

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