Research Calls: Vijaya Bank

Tower Capital & Securities has initiated coverage on Vijaya Bank recommending a 'buy' with a target price of Rs 75 in atleast next 12 months.

The bank is expected to witness improvement in core interest earnings. Retail advances which constitutes 37 per cent of total advances in H1FY06, is expected to go upto 40 per cent in coming years.

The bank is well guarded from additional provisioning in the rising interest scenario as it has transferred majority of the investments to the HTM segments in Q1FY06. As on H1FY06, HTM constitutes 56 per cent of the total investments.

The bank's Tier I CAR is expected to improve significantly with inclusion of IFR into Tier I capital and is comfortably placed to raise its Tier II borrowings in future to adhere to Basel II norms. The stock trades at an attractive P/Adj BV of 1.5x FY06E and 1.2x FY07E.

Syndicate Bank

Brics PCG Research recommends a 'buy' on Syndicate Bank. The current government holding in the bank stands at 66.5 per cent. Strong growth in credit would result in better NII growth.

Margins are expected to remain healthy. Its asset quality is expected to improve on the back of low incremental slippage ratio and better provisioning policy.

Operating costs as a percentage of total assets would start tapering off from FY07 as more business would be covered under CBS.

The RBI norms relating to the inclusion of hybrid securities under tier I capital would decide about the fresh issue of equity shares. One concern for the bank could be delay in implementation of CBS, which could result in higher operating costs.