LARGE CAP
Sharekhan & Karvy Stock Broking
HDFC CMP: Rs 1,521
We believe, HDFC is among the better-diversified players in the Indian financial services space with leadership position in mortgage market and strong presence in other financial services (life insurance, asset management and banking). Operationally, HDFC’s fund mobilisation abilities and operational efficiency should help maintain healthy earnings momentum in a tough operating environment.
BANK OF BARODA CMP: Rs 275
We are increasing our FY2009 net earning estimates by 8% to Rs 18 billion and FT2010 net earning by 10% to Rs 22.8 billion. We are maintaining our price target of Rs 335. In our book value we have adjusted for Rs 721 million which is unprovided for the Accounting Standard (AS)-15 which we had not adjusted for earlier. The bank would amortise this amount over five years.
MID CAP
Angel Broking & Karvy Stock Broking
CORPORATION BANK CMP: Rs196
We are positive on Corporation Bank due to its efficient operations reflected in low operating expenses, as a percent to average assets, superior asset quality and proactive investments in modern distribution and payment systems. But the bank’s relatively small size and scope of operations as well as urban focus that subjects it to greater competition from private banks, temper the growth outlook on the key competitive parameters of CASA and fee income.
DENA BANK CMP: Rs 33
At current valuations, Dena Bank is the most attractively valued bank in our government banking universe, it is also the smallest. As a result of the wage hike provisions and lower other income we revise our FY2009 EPS to Rs 12.8 and FY2010 EPS to Rs 16.8. In FY2009 earnings would only increase by 2% y-o-y.
SMALL CAP
SMC Global
SOUTH INDIAN BANK CMP: Rs 57
Kerala-based South Indian Bank has drawn up a five-year plan to drive total business to Rs 75,000 crore by March 2013. Under the five-year plan, banks deposit are likely to grow to Rs 44,000 crore and advances to Rs 31,000 crore by March 2013. We believe that stock is undervalued to the future potential price.
KARNATAKA BANK CMP: Rs 80
Karnataka Bank has a dominant presence in the southern and western parts of India. With 12.17% capital adequacy as on March 2008, we believe the bank has sufficient capital to grow its loan book and comply with Basel II norms. With the implementation of Basel- II norms, the management expects a 100bps impact on its capital adequacy. We believe that stock is undervalued to the future potential price.
Source reference: Economic Times
