Here is ICICI Securities Recommendation's Excerpts,
Syndicate Bank (SBL) is a mid-sized public sector bank with over 80 years of expertise and spread across India through 2,364 branches. The bank is in a consolidation phase where we see the business mix growing at 16% CAGR to | 278,580 crore over FY10-12E (vs. 20% CAGR expected for industry) supported by 16% CAGR in both advances (vs. 32% CAGR in FY05-09) and deposits (vs. 26% in FY05-09). We anticipate that incremental slippages will ebb from H2FY12E supporting bottomline growth. We expect 30% CAGR in PAT over FY10-12E to | 1381 crore.
At the CMP of | 120, the stock is trading at an attractive 1.2x FY12E P/ABV. We expect the bank’s asset quality concern to recede in FY12E on the back of high provision cover and the management’s focus on high quality loan portfolio. We expect SBL’s NIM to stay at peak levels of above 3% (reported) till FY12E leading to improved bottomline and deliver RoE of 20% and RoA of 0.8% in FY12E. We value SBL at 1.4x FY12E ABV and arrive at a TP of | 144 and initiate coverage with a STRONG BUY rating.
