Emkay Global Financial Services has reinforced its bullish stance on Indian Bank, issuing a reiterated BUY call on October 17, 2025, with a notable 12-month target price of Rs 900, reflecting robust confidence in the bank’s sustained outperformance. With the current market price at Rs 771 and a projected upside of 16.7%, Emkay’s recommendation hinges on Indian Bank’s resilient profit growth, top-tier asset quality, and a sharply enhanced capital buffer that positions it as a frontrunner among Indian public sector banks (PSBs).

Emkay’s Investment Thesis—Why Indian Bank?

Emkay Global Financial Services has upgraded Indian Bank’s 12-month target price to Rs 900, valuing the stock at 1.3x Sep-27E adjusted book value, compared to 1.2x previously. The repeated BUY recommendation signals strong conviction in Indian Bank’s growth momentum, cost efficiency and prudent provisioning strategy, with expected return on equity (RoE) ranging from 16% to 18% for FY26-28 and return on assets (RoA) projected to sustain at 1.2%-1.3%. As PSBs face asset quality and margin compression headwinds, Indian Bank stands out for its superior risk management and consistent delivery on earnings.

Pivotal Financial Performance—Quarterly and Annual Highlights

The bank delivered a Q2 PAT of Rs 30.18bn, with net interest margins (NIMs) holding firm at 3.2% despite industry-wide repricing concerns. For the financial year ended March 2025, Indian Bank reported the following metrics: - Net profit: Rs 109.18bn (FY25), expected to surge to Rs 122.09bn in FY26 and Rs 138.28bn in FY28 - Loan growth: 10.9% in FY25, projected at 12.2% for FY26, and further up to 13.6% by FY28 - NII growth: Eased from 15.1% in FY24 to 8.2% in FY25, but likely to revive to 10.8% in FY27 and 12.8% in FY28 - Diluted EPS: Rs 81.1 (FY25), forecast to reach Rs 102.7 by FY28 - Book Value: Rs 461.1 per share (FY25), expected to hit Rs 698.0 by FY28

Forecast Table—Key Metrics and Valuation Levels

Here’s a structured HTML table summarizing multi-year projections and current valuation ratios for Indian Bank, outlining vital levels for traders and long-term investors:

Asset Quality—Defining Prudent Banking

Indian Bank’s asset quality remains unmatched, as the gross NPA ratio is set to drop from 3.1% in FY25 to 2.0% in FY26 and 1.4% by FY28, while NNPA is predicted to hover around 0.2%. The Provision Coverage Ratio stands at a commanding 94%, fortifying the balance sheet against systemic risks and regulatory changes, especially the impending ECL norm implementation. Slippages have been consistently subdued, anchored by recoveries from government-backed PSU accounts and strong underwriting discipline.

Margins and Capital Adequacy—Safeguarding Growth

Despite sectoral challenges from MCLR down-pricing, Indian Bank’s NIMs have stabilized at 3.2%, buoyed by lower funding costs and disciplined portfolio management. Tier I and CET-1 capital ratios have remained robust, suggesting ample headroom for sustained growth and defending against regulatory headwinds. The bank’s guidance indicates margins will bottom out in Q3 and rebound thereafter, reinforcing investor optimism.

Segment Strategy—Driving the Retail Franchise

The bank’s RAM (Retail, Agriculture and MSME) book continues to drive double-digit traction, particularly in vehicle finance, home mortgages and gold loans, with agricultural gold loan portfolios standing tall at Rs 1.04trn. Indian Bank’s proactive approach in opening new agri business cells and harnessing GST rate cuts for consumption-led sectors are expected to keep growth buoyant. Corporate loan sanctions have jumped by 60bps YoY, countering subdued micro-enterprise lending as certain IBPC portfolios were sold off.

Investor Takeaway—Levels and Entry Strategy

Given the current price of Rs 771 and Emkay’s revised target price of Rs 900, Indian Bank offers a substantial upside. The pivotal investor levels: - Upside: ~17% potential return at target price Rs 900 - Support: Rs 750-760, reflecting strong accumulation zones - Resistance: Rs 800-806, representing the 52-week high
Long-term investors should consider positions at or below Rs 770, with ability to accumulate further during dips, given the bank’s industry-leading asset quality and earnings trajectory. The forward PE is attractively poised at 8.5x for FY26 and the bank’s robust dividend yield adds to total shareholder returns.

Risks and Caveats—What Could Derail the Story?

Investors must watch out for macroeconomic dislocation, deteriorating asset quality and potential PSB mergers, which could present unforeseen challenges. Emkay Global, however, remains confident that Indian Bank’s prudent management and buffers lower the risk profile substantially within the PSU banking universe.

Conclusion—Why Indian Bank Outshines the Sector

Indian Bank stands as Emkay’s preferred pick among PSBs, underpinned by superior asset quality, credible management, and the best-in-class earnings growth. The revised BUY call and Rs 900 target encapsulate both fundamentals and valuation re-rating scope for investors seeking quality and stability in uncertain market terrain.