Oriental Bank of Commerce : Buy Call for Target of Rs 374

by khalid on 08/05/2011 · 0 comments

Stock Broking firm ICICI Securities Limited is bullish on Oriental Bank of Commerce and has given ‘Buy’ call for a time horizon of 12 months to get a target price of Rs 374 per share.

Market Price on Recommendation : Rs 321 on 4th May 2011
Target Price : Rs 374 per share
Time Horizon : 12 months
Potential Upside : 17%

According to the Broking firm, the investors can buy the stock on dips with a 12 months target of Rs 374. Oriental Bank of Commerce (OBC) is PSU Bank. The broking firm has said that they are lowering our PAT guidance for FY12E to Rs 1745 crore on account of higher CoD lowering NII growth and higher provisions. We estimate 20% CAGR in PAT due to 20% CAGR in business over FY11-13E

Valuations : OBC is currently trading at an attractive 0.8x its FY13E ABV, which is the lowest across the mid-size public sector bank space. We believe the price has already factored in most of the negatives like below industry business growth, declining asset quality and pressure on NIM primarily due to the 50 bps hike in savings rate. We expect slippages to slow down as 97% of loans have already migrated to system based NPA recognition. We expect RoA of 1.1% and RoE of 16% by FY13E and believe it should at least get a multiple of 0.9x FY13E ABV. Hence, we have arrived at a target price of Rs 374 and recommend a “BUY” rating on the stock.

Share’s Data :-
BSE Code : 500315
Mkt. Cap : Rs 9,835.12 Crores
Oriental Bank of Commerce share’s CMP is Rs 337.05 on 6th May 2011.

Stay tuned to BelltheBull Blog for more news on Oriental Bank of Commerce !

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