Angel Broking views on Bank stocks - Punjab National Bank, Union Bank, Oriental Bank of Commerce, Bank Of India

Union Bank - Target of Rs 194


Angel Broking has recommended a buy rating Union Bank of India with a target of Rs 194 in its November 21, 2008 research report. "We believe UNBK is amongst the more profitable, efficient and competitive PSU Banks. We have a positive outlook on the bank due to traction in CASA deposit growth driven by large branch expansion plans as well as cost-efficient operations. We expect the Bank to deliver 12% CAGR in Net Profit and 24% RoE over FY2008-10E."


"At Rs 144, the stock is trading at 4.2x FY2010E EPS of Rs 34.3 and 0.9x FY2010E ABV of Rs 161.9. The stock has been trading at a median one-year forward P/ABV multiple of 1.1x since April 2002. We value the stock at 1.2x FY2010E ABV to arrive at a 12-month Target Price of Rs 194, implying an upside of 35%. We recommend a Buy on the stock," says Angel Broking's research report.


PNB - Target of Rs 625


Angel Broking has recommended a buy rating on Punjab National Bank (PNB) with a target of Rs 625 in its November 21, 2008 research report. "We believe PNB is amongst the more profitable and competitive PSBs, with relatively moderate Earnings growth and strong RoE prospects. We have a positive outlook on the Bank due to its superior CASA ratio and high core income component in Earnings, tempered by relatively moderate growth momentum. We expect the bank to deliver about 21% RoE over FY2008-10E and maintain high RoEs relative to peers over the longer term as well, underpinning higher valuation multiples."


"At Rs 451, the stock is trading at 4.9x FY2010E EPS of Rs 92.5 and 0.9x FY2010E Adjusted Book Value (ABV) of Rs 480.4. We value the stock at 1.3x FY2010E ABV to arrive at a 12-month Target Price of Rs 625,implying an upside of 39%. We recommend a Buy on the stock," says Angel Broking's research report.


Bank Of India - Target of Rs 317


Angel Broking has recommended a buy rating on Bank Of India with a target price of Rs 317 in its November 21, 2008 research report. "We are positive on Bank of India (BOI) due to its balanced funding mix, moderate operating costs, efficient capital management and high core fee income. Consistent improvement in operating leverage and relatively higher resilience in NIMs have led to improvement in core RoE. Hence, we value the stock at 1.3x FY2010E ABV (above its median P/ABV of 1.0x since April 2002) to arrive at a 12-month target price of Rs 317. We recommend a Buy on the stock," says Angel's research report.



Oriental Bank - Target of Rs 192


Angel Broking has recommended a buy rating on Oriental Bank of Commerce with a 12-month target price of Rs 192 in its November 21, 2008 research report. "Oriental Bank of Commerce's (OBC) sustainable RoAs are low on account of its weak Deposit mix and low Fee income. On account of reduced sustainable RoAs due to substantial NIM compression and moderate growth outlook on NII and Fee Income front, we value the stock at 0.7x FY2010E ABV, below the median one-year forward P/ABV multiple of 1.1x at which it has traded since April 2002."


"Nonetheless, at Rs 137, the stock is trading at cheap valuations of 3.9x FY2010E EPS of Rs 35.7 and 0.5x FY2010E Adjusted Book Value (ABV) of Rs 273.7. Hence, we recommend a Buy on the stock, with a 12-month Target Price of Rs 192, translating into an upside of 39%," says Angel Broking's research report.