Motilal Oswal Maintains 'Buy' Recommendation for Indian Bank, Sets Target Price at Rs 1,025

Indian Bank Sees 5% YoY Growth in PAT, Despite Higher Provisions

Indian Bank reported a Profit After Tax (PAT) of INR 31.0 billion for the fourth quarter of FY26, representing a 5% year-over-year (YoY) growth. This figure missed the expected mark by 5%. The bank's Net Interest Income (NII) grew 11% YoY and 3% quarter-over-quarter (QoQ) to INR 71.1 billion, in line with the research firm's estimate of INR 70.5 billion.

The Net Interest Margin (NIM) contracted by 5 basis points (bp) to 3.23% QoQ. Advances grew 14.7% YoY and 4.7% QoQ, while deposits rose 12.3% YoY and 4.7% QoQ. Consequently, the Current Deposits (C/D) ratio remained relatively flat QoQ at 79.1%. The CASA (Current Account and Savings Account) ratio stood at 37.9%, a 50 basis point increase from the previous quarter.

Earnings Estimates and Outlook

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In light of the bank's performance, the research firm has fine-tuned its earnings estimate and anticipates Indian Bank to deliver a Return on Assets (RoA) and Return on Equity (RoE) of 1.3% and 17.6% in FY27E, respectively. The firm has reiterated its BUY recommendation for the bank, with a target price of INR 1,025. This target price is premised on 1.5 times the estimated Book Value (BV) for September 2027.