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AUM Capital
Syndicate Bank (Buy)
CMP: ₹63.40
Target: ₹95
Syndicate Bank is one of the oldest and major commercial bank in India, established in 1925. The bank has carved a niche for itself by 90 years of dominant presence in the banking business which has enabled it to deeply understand Indian banking sector and also helped it to build a solid customer base.
Despite challenging environment, the bank has maintained its advances growth rate above the industry advances growth. The bank’s advances has grown at a CAGR of about 18 per cent to about ₹2.02 lakh crore over the period of FY2012-15, whereas, industry’s advances grew at a CAGR of about 13 per cent to about ₹ 73 lakh crore over the same period.
In Q3FY16, its advances grew by about 12 per cent y-o-y to ₹2.08 lakh crore. Government’s focus on the ailing sectors such as infrastructure, power, iron & steel, etc, softening interest rate cycle coupled with RBI’s vigilance on asset quality of banks would lead to re-rating of the stock.
We recommend a ‘buy’ on the stock with an upside potential of about 51 per cent from the current level with an investment horizon of 12 months.
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