Buy Andhra Bank, target of Rs 74: Karvy Stock Broking

Karvy Stock Broking has recommended a buy rating on Andhra Bank with a price target of Rs 74 in its April 17, 2009 research report.

"In 4th QFY09, we expect the bank to record 22% growth in deposits and 31% growth in net advances and would report 39% (Y/Y) growth in net interest income (NII) to Rs 4.5 billion; in this quarter growth rates in credit and deposits and better cost of funding would marginally enhance margin. Andhra Bank's fee-based income growth would drift down and treasury income would be absent. We estimate that the bank's other income would de-grow by 22% (Y/Y) and total net income would grow by 15% (Y/Y)."

"We expect loan losses provisions of Rs 450 million compared to Rs 285 million in Q4FY08; we estimate the bank's bottomline to grow by 6.9% (Y/Y) to Rs 1.33 billion. We rate the stock as a BUY with a price target of Rs 74 at 1.05x adjusted book value FY2010," says Karvy Stock Broking's research report.