Bit Background:

Headquarted in Chennai, Indian Bank [INDIANB] is a leading bank in South India with widespread presence in Tamil Nadu, Kerala, Andhra Pradesh and Pondicherry. It was nationalised in 1969. It is a medium-sized bank and its balance sheet size stood at Rs 84,122 crore in FY 2009. It has 1,642 branches.

    In the current decade, the bank has seen a turn-around. At the end of March 2000, bad loans, or net non-performing assets, formed 16% of Indian bank's net advances. In FY06 it absorbed all the losses in its capital, which fell to Rs 744 crore from Rs 4,574 crore in the previous year. Since then, Indian Bank's profit has grown at compounded annual growth rate (CAGR) of 35% every year, while its balance sheet has grown at a CAGR of 21%. This shows that it has enough reach and scale to leverage.

I feel below are few strong points :

1) Consistent RoE of > 21% since last 5 years
2) RoA > 1.5 since last 3 years..
3) Gross NPA of 0.91% as on 30.09.2009
4) NIM stood at more than 3.5% in last six financial years
5) FY09 Book Vale Rs.156. Available at P/BV=1.
6) Available at P/E = 5.4 at current market cap of Rs.6770 crores and div. yield of > 3%..

     2009     2008     2007     2006     2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
RoA     1.59     1.53     1.5     1.17     1.11
RoE     22.03     21.18     22.59     22.24     21.74

Devesh,

I also had same doubt on NIM.. but here is the source http://ddshankar.wordpress.com/2009/07/04/indian-bank-the-dark-horse/....

IB's NIMs have been consistently 3%+.

Edited by master - 20/Nov/2009 at 10:02am

Interest rates rising in Q1-11 will do no good to IB. Moreover, revised coverage norms will call for accelerated provisioning.