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Allahabad Bank |
No major worries |
BUY
CMP: Rs216 Target Price: Rs300
n We recently spoke to the management of ALBK on the liquidity squeeze, rising costs and movement in NPAs
n ALBK’s NIMs are likely to be maintained at 3.0% (calculated) for Q3FY11 however, they may see marginal dip in Q4FY11. We have already built in 30bps contraction for H2FY11
n The slippages are likely to be controlled at 1-1.2%. Upgrades in one large account possible in Q4FY11. The provisions may go up due to MTM losses in AFS bond portfolio
n Valuations attractive at 1.4x FY11E/1.1x FY12E ABV. We maintain our BUY rating with price target of Rs300 (at 1.5x FY12E ABV). Remains our top pick in mid-sized PSU banks
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