However, a few of its peers do come close on asset quality and profit growth. For instance, Vijaya Bank has posted a strong 76 per cent growth in its net profit in the first nine months of FY17, and it is also ahead of Indian Bank on asset quality. Syndicate Bank is slightly ahead on net NPA ratio, but lags on profit front. Nevertheless, even at 6.7 per cent levels, Indian Bank’s net NPAs are high.
Having said that, Indian Bank has a lot of catching up to do, given that it is still small compared to some of its peers, which are as old as Indian Bank. Kishor Kharat, chief executive of Indian Bank, though sounds confident about his plan to grow the lender in the coming five years. As part of the plan, he aims to double the bank’s assets and liabilities to Rs 6 lakh crore, and focus on reducing gross and net NPA ratios to below five and three per cent, respectively. The bank would remain committed to improve its retail loan book also, he says. Analysts also sound confident about Indian Bank’s targets.
Asutosh Kumar Mishra, analyst at Reliance Securities, says that the loss of Indian Overseas Bank (market leader in the southern India), thanks to its asset quality, will be Indian Bank’s gain. Indian Bank is also reaping gains from its restructuring that concluded about two years ago. “When most banks
were aggressively expanding their loan book till 2012-13, Indian Bank was focusing on getting its business right. From being the bank with highest restructuring book, the ratio has fallen to the lowest levels among PSBs,” Mishra adds.
For this reason, analysts believe that as the next round of capital dilution happens, Indian Bank will be among the few PSBs to benefit from the exercise.
Capital adequacy ratio of 13.6 per cent will create value for shareholders. Eight of 11 analysts polled on Bloomberg recommend ‘buy’ and no one has ‘sell’ recommendation.
However, given the run-up in the past one year, immediate gains may be restricted. At Rs 311, the stock trades near its all-time high prices.