Not HDFC Bank or Axis Bank, Anand Rathi picks this banking stock to buy this week

“We advise traders to accumulate the stock in the range of ₹90 – 92 with a stop loss of ₹81 (daily closing basis) for an upside target of ₹111,” the firm said in a note.

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The shares of IDBI Bank closed 1.64 per cent lower on Tuesday’s trading session at ₹90.20 per share. The IDBI Bank stock has yielded 49.96 per cent returns in the last six months and 64.45 per cent in the last one year on National Stock Exchange (NSE).

In January 2024, IDBI BANK witnessed a breakout from the contracting pattern near the 77 mark. Although the initial target for the pattern was approximately 110, the stock deviated from this trajectory upon nearing the 98 level. Subsequently, it has retraced to retest the breakout zone once again.

“During the month of Jan 2024, IDBI BANK confirmed a breakout from the contracting pattern around 77 mark. The target for the pattern was around 110 but stock took a turn after reaching near 98 level and has now again retested the breakout zone. We are now witnessing another breakout which resembles a bullish Cup and Handle pattern,” the brokerage firm added.

The bank engages in commercial banking and other banking activities, boasting a substantial loan book valued at ₹27,800 crores. Key strengths include a robust loan book, with the Provision Coverage Ratio (PCR) standing at approximately 98 per cent and the Current Account Savings Account (CASA) ratio at around 56 per cent.

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With a moderation in slippage rates and robust liquidity and capitalization, the bank is poised for growth. Furthermore, it stands to benefit from significant recoveries from its large corporate written-off pool as resolutions progress through the National Company Law Tribunal (NCLT).

Projections indicate a potential 14 per cent Compound Annual Growth Rate (CAGR) for the loan book from FY23 to FY25, accompanied by a projected Profit After Tax (PAT) growth of over 17 per cent over the next two years. These factors collectively position the bank for sustained expansion and profitability in the foreseeable future, according to the brokerage firm.

In January this year, IDBI Bank Ltd announced a significant 57.3 per cent year-on-year (YoY) increase in net profit for the quarter ending in December, amounting to ₹1,458.20 crore.

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Published: 30 Apr 2024, 05:59 PM IST