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.

Stock Views on Marico, Union Bank, Akruti City

KRChoksey on Marico - Target Rs 64

KRChoksey has recommended a buy rating on Marico with target of Rs 64 in its report on October 22, 2008. "Marico’s net sales increased 30.1% Y-o-Y to Rs 603.5 crore in Q2FY09 as against Rs 463.8 crore during Q2Y08. EBITDA of the company registered a growth of 14.1% Y-o-Y to 73.9 crore & PAT rose by 11.6% Y-o-Y to Rs 47.1 crore. The second half of FY09 is expected to present significant challenges in the domestic consumer products business, though the long term fundamentals of the company remains strong. At CMP of Rs 53.3, the stock is trading at 18.5x on FY09E EPS of Rs 2.8. We recommend a BUY on this stock with target price of Rs 64.0, which represents an upside potential of 20.0%," says KRChoksey's research report.

Emkay Global on Union Bank - Target of Rs 200

Emkay Global Financial Services has maintained its buy rating on Union Bank of India with a target of Rs 200 in its November 3, 2008 research report. "Union Bank of India’s (UBI) reported net profit of Rs 3.6 billion for Q2FY09. The operating performance for Q2FY09 was much stronger than we expected with 48.6% growth in NII and 47% growth in fee income. The improving asset quality and strong cost/asset ratios remain positives for the bank."

"We have upgraded our earnings estimates for the bank by 10% each for FY09 and FY10. We continue to maintain it as one of our top picks. The stock is currently trading at 0.9x FY10E ABV and 3.9x FY10E FDPER. We maintain our BUY recommendation on the stock with price target of Rs 200," says Emkay Global Financial Services' research report.

HDFC Securities on Akruti City

HDFC Securities has recommended a buy rating on Akruti City in its report dated November 12, 2008. "Akruti’s revenues and EBITDA grew by 5%and 9% respectively on account of an increase in other income (including income from JVs). Akruti had EBITDA margins of 98% and PAT margins of 78% in Q2 FY09 due to its high mix of commercial projects (49% of land bank) and very little presence in the residential segment (10% of land bank) as compared to other players. Akruti City, with its land bank in these areas, is in a position to tap this market. Given the visibility in project execution, its diverse land bank and strong presence in SRA schemes, we recommend a BUY on the stock," says HDFC Securities' research report.

Motilal Oswal views on Bank Stocks - Union Bank, ICICI Bank, SBI

Union Bank - Target Rs 225

Motilal Oswal has maintained its buy rating on Union Bank of India with a target of Rs 225 in its October 27, 2008 research report. "NII grew 49% YoY to Rs 9.8 billion on the back of the strong improvement in margins and 26% YoY growth in loans. We are impressed by the core operating performance in 2QFY09 and expect the strong trend to continue. NII growth, cost of funds and margin movements are encouraging. Asset quality has improved significantly and would enable lower provisions ahead."

"We are upgrading our estimates by 5% for FY09 and FY10. We expect the bank to report EPS of Rs 31 and Rs 36 in FY09 and FY10. We expect BV to be Rs135 in FY09 and Rs164 in FY10. The stock is trading at 4x FY09E EPS and 0.9x FY09E BV. RoE would remain strong at 24%+ over next two years. Maintain Buy, target of Rs 225," says Motilal Oswal's research report.

ICICI Bank - Target of Rs 581

Motilal Oswal has maintained its buy rating on ICICI Bank with a target of Rs 581 in its October 27, 2008 research report. "ICICI Bank's NII grew 20% YoY in 2QFY09 (in line with exp) driven by stable margins on the back of slower loan growth (7%), lower term deposits (8% decline), and higher CASA growth at 16%. CASA ratio improved to 30%. PAT was flat in 2QFY09 to Rs 10.1 billion."

"We are reducing our target multiple of ICICI Bank to 1x FY10E ABV given its subdued core RoE (<12%) for the next couple of years. We are reducing our target valuations for all its subsidiaries due to lower expected growth. Adjusted for value of subs at Rs 175 per share, the stock trades at 0.4x FY09E BV. Maintain Buy with a revised target price of Rs 581, an 84% upside," says Motilal Oswal's research report.

SBI - Target of Rs 2057

Motilal Oswal has maintained its buy rating on State Bank of India with a target of Rs 2057 in its October 27, 2008 research report. "SBI’s 2QFY09 PAT of Rs 22.6 billion, driven by strong core business performance. Key highlights: 1) loans up 37% and deposits up 28%; CASA ratio marginally up YoY, decline QoQ; CASA deposits grew by 27% YoY, 2) 45% NII growth v/s our estimate of 30%; margins improve 15bp YoY to 3.16% in 1HFY09, 3) fee growth (ex forex) of 40%, and 4) gross NPA at 2.5% and net NPA at 1.3%; some stress visible."

"We have increased SBI’s earnings by 8% for FY09 to factor in higher fees, higher margins growth. However, for FY10, we have reduced our estimate by 2%, due to higher provisions. Adjusted for value of SBI Life at Rs117 in FY09 and Rs133 in FY10, SBI trades at 0.8x FY09E Cons BV and 0.7x FY10E Cons BV. Maintain Buy, target Rs 2,057," says Motilal Oswal's research report.