Buy Corporation Bank; target Rs 310: Angel

Angel Broking has recommended a buy rating on Corporation Bank, with price target of Rs 310, in its report dated October 31, 2008. "We are positive on Corporation Bank due to its efficient operations reflected in low Operating expenses, as a % to average Assets, superior Asset quality and proactive investments in modern distribution and payment systems (relative to peers). However, the Bank’s relatively small size and scope of operations as well as urban focus that subjects it to greater competition from private banks, temper the growth outlook on the key competitive parameters of CASA and Fee Income."

"Further, on account of reduced sustainable RoAs due to the substantial NIM compression, anticipated continuation of Margin pressures and moderate growth outlook on NII and Fee Income front, we reduce our Target P/ABV multiple from 0.9x to 0.8x. Nonetheless, at the CMP, the stock is trading at attractive valuations of 3.0x FY2010E EPS of Rs 64.7 and 0.5x FY2010E Adjusted Book Value (ABV) of Rs 387.3. Hence, we maintain a Buy on the stock, with a revised Target Price of Rs 310 (Rs 337)," says Angel Broking's research report.

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Source: Moneycontrol