As I said before, banking sector is looking really promising even from the the next year view, it is time to start picking the banking stocks on any kind of correction. Corporation Bank has corrected about 50 odd rupees from it’s 52 weeks high it hit a few days back and it could be the right moment to get into the stock from a medium term perspective.

Analysing Financial Results

Corporate Bank posted revenues of 2,158cr (22% YoY) and net profit of 351cr(20.5% YoY). In terms of annual figures, company posted a growth of 20% on revenues and 30% in terms of net profit from FY09 to FY10. These kind of growth are speaking volumes about the company. Another thing I liked about Corporation Bank is the rise in profits each and every quarter. There is no uncertainity about the profits, company is nicely growing on QoQ basis as well.

Analysing Stock Price

Currently the stock is trading around 750 rupees with a market capital of 10,750cr. As per FY10 earnings, the stock comes to a P/E ratio of 9.18. If we assume company delivers the second half of the FY11 as on first half, we see the earnings of FY11 around 1,350cr which brings the P/E as per current price to around 8. A P/E of 8 makes the stock look extremely attractive at current levels. If even if were to maintain the P/E of 9-10 suppose, the stock should go up atleast 20% from current levels by FY11 end. So I’m giving a buy recommendation on the stock.

Buy Corporation Bank with targets of 900+

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