Motilal Oswal and ICICI Securities have issued buy ratings on Indian Bank with aligned target prices of ₹1,020-1025 in their respective research reports dated October 15-16, 2026. According to both brokerages' analysis, the recommendations are based on the bank's strong quarterly performance and improved asset quality metrics. Motilal Oswal's target price of ₹1,025 is premised on 1.4x March 2028 estimated adjusted book value, while ICICI Securities' ₹1,020 target maintains the same valuation multiple. Emkay Global has also joined the consensus with a ₹1,000 target price, valuing the bank at 1.5x Sep-28E ABV and maintaining a Buy rating. The consensus bullish stance reflects confidence in Indian Bank's financial trajectory and asset quality improvements.
Indian Bank reported a Q2FY27 PAT of ₹3,460 crore, representing a 14.7% year-on-year growth and 6% quarter-on-quarter increase. As reported by both Motilal Oswal and ICICI Securities, the bank's net interest income (NII) grew 17.8% YoY and 4% QoQ to ₹77.2 billion, which was in line with estimates. The net interest margin (NIM) improved by 2 basis points quarter-on-quarter to 3.31%, also meeting expectations despite FCNR pressure. The strong performance was aided by smart use of one-time gains for stronger financial cushions, with the bank utilizing NSE gains of ₹13.9 billion towards shoring up ECL provisions. The return on assets (RoA) remains steady and superior at 1.3% compared to peers, demonstrating effective asset management.
According to the research reports, advances grew 16.4% YoY and 5.7% QoQ, while deposits rose 12.5% YoY and 3.5% QoQ. The credit-to-deposit ratio increased by 171 basis points to 81.4%, indicating stronger business momentum. However, domestic CASA ratio declined slightly to 39.4% from 39.7% in Q1FY27, which was noted as a key concern. Growth accelerated to ~6% QoQ (~17% YoY), reflecting improved business traction across segments. Emkay Global notes that some of the reported loan growth benefited from the ₹210 billion FCNR(B) mobilisation.
The bank demonstrated significant improvement in asset quality metrics during the quarter. As reported by both brokerages, slippages declined to ₹12 billion from ₹13 billion in Q1FY27, indicating better credit management. GNPA ratio improved by 25 basis points QoQ to 1.61%, while NNPA ratio improved by 1 basis point QoQ to 0.14%. The provision coverage ratio stood at 91.5%, providing adequate buffer against potential losses. Indian Bank set aside extra funds for potential losses, which helped lower bad loan ratios and cut down on new defaults. The bank utilized NSE gains of ₹13.9 billion towards shoring up ECL provisions of ₹15 billion, bringing cumulative provisions to ₹25 billion out of ₹35 billion required. With net NPA at 14bps, PCR >90%, SMA 1+2 loans at 2%, and outstanding ECL provisions at ₹25 billion, the bank remains well positioned on ECL transition and recurring impact.
Both brokerages have raised their growth and earnings estimates based on the strong quarterly performance. ICICI Securities raised growth estimates to ~16% YoY for FY27E and raised EPS by ~4% each for FY27-28E. According to Motilal Oswal, the bank expects further residual provisions of ₹10 billion. Emkay Global expects Indian Bank to deliver a superior ROA of about 1.2% and ROE of 16-17% over FY27-29E, coupled with its best-in-class asset-quality performance, strong capital buffer, and credible management. The bank seems least sensitive to draught-related stress, providing additional resilience in challenging market conditions. Management raised guidance on FY27 advances growth to 13-14% and deposit growth to 11-12%, while guiding for 5-7bps NIM expansion in Q3-FY27, supported by repo-rate transmission and lagged deposit repricing.
