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1. Indian Bank:

The buy has been given on this PSU Bank for a target price of Rs. 214 i.e. an upside of 14 percent from the current levels.

HDFC Securities’ take on Indian Bank:

There has been instilled confidence after the successful transaction of Air India that government will progress well on its divestment agenda. Also, for the PSBs that are considered to be weak IDBI Bank as well as Bank of Maharashtra there is seen cleaning of books and transfer of bad assets to the NARC as visible in the Q2 results.

The move augurs well for the PSBs which until some time faced huge NPA crisis. “Both of these developments augur well for the prospects of PSU banking stocks as they provide higher margin of safety in terms of valuation in an otherwise over-heated market”, said the brokerage report.

“We have been observing a sharp re-rating in the PSU banking space lately. Nifty PSU Bank Index has been making higher highs since last four weeks and is up by 12.8% during that time. Privatization theme is keeping them in the lime light and now the hope of earnings as wellas asset quality recovery would further sustain the rally. Some of the good quality names within the PSBs with loan book or CASA ratio as good as some top tier private banks, are available at almost half the book value of FY23E; as against about 2x to 3x Price-to-Book Value for private players”, added the report.

Re-rating prospects to increase with acquisition by big corporates

Lending quality has been worked on and there is no crisis amid the covid crisis. So, there are expectations that the valuation gap between private and public lenders will reduce faster. “We believe that the PSU banks might see goodaddition to the book value per share in the next year mainly on account relatively lower credit costs and recoveries. We further believecquisition of some PSU Banks by the any prestigious corporates/Institutions – local or foreign – at a good valuation may further re-rate the sector.

ICRA expects credit growth for banks

Amid increased vaccination pace and pick up in recovery there is expected pick up in credit offtake too. ICRA expects credit growth of 7.3-8.3% for banks

for FY22 compared to 5.5% for FY21. It believes that with the improved capital and profitability position of public banks, which accounts for a 62% share in bank loans, and abundant liquidity in the banking system, supply of credit does not appear to be a constraint.

Rationale for a buy

1. Better managed PSB

2. low valuations

3. Required limited support from the centre in raising funds.

4. Not a single rupee loss in the last decade despite the credit blow that hit the overall banking industry.

5. Good dividend track record

Disclaimer:

The stock mentioned herein is taken from the report of HDFC Securities and investors need not construe the details given here as a suggestion to buy rather they should do their own study and analysis.

GoodReturns.in

LIC’s Jeevan Shiromani has been designed by the public insurance corporation as an assured high return savings plan. The scheme is particularly targeted at high net-worth individuals. It is a non-linked, participating, individual, life assurance savings plan.

Policy benefits and sum assured

The minimum basic sum assured under this policy is Rs. 1 crore, with no maximum or upper limit. LIC informs, “Under this plan, Guaranteed Additions shall accrue at the rate of Rs. 50 per thousand Basic Sum Assured for the first five years and Rs. 55/- per 1000 Basic Sum Assured from 6th policy year till the end of premium paying term. In addition, the policy shall participate in the profits in form of Loyalty Additions.” The Basic Sum Assured will be in multiples of Rs. 5,00,000/-.

Eligibility

Any adult, till the age of 55 years can sign up for this plan. A person of 55 years old can take up this plan for a policy term of 14 years, similarly, a 51 years old can take up this for a policy term of 16 years, 48 years old can take up this for a policy term of 18 years, and a 45 years old can take up this for a policy term of 20 years.

Modes Of Premium Payment

The modes of premium payments are Yearly, Half Yearly, Quarterly, and Monthly, additionally a regular salary deductions (SSS) mode is also available under this plan.

Survival Benefits

The Survival Benefits on the life assured surviving to each of the specified durations during the policy term, a fixed percentage of Basic Sum Assured will be paid, according to the public life insurance corporation.

The fixed percentage for various policy terms has been mentioned as below:

Maturity Benefit

The Maturity Benefit on the life assured of the policyholder, surviving to the end of the policy term is the Sum Assured on Maturity along with accrued Guaranteed Additions will be paid.

The Sum Assured on Maturity has been mentioned as below:

Death Benefits

If the policyholder dies, during the first 5 years, the Sum Assured on Death benefits along with accrued Guaranteed Additions will be paid. If the policyholder dies, after 5 years of the policy, but before the date of maturity, the Sum Assured on Death benefits along with accrued Guaranteed Additions and Loyalty Addition (if any) will be paid. LIC will count the Sum Assured on Death benefits as the higher of 7 times of annualized premium or 125% Basic Sum Assured. This death benefit will not be less than 105% of all the premiums paid as of the date of death. Premiums are not included any taxes, while the extra amount is chargeable under the policy.

To know more details and application check this official LIC link: https://licindia.in/Products/Insurance-Plan/LIC-s-Jeevan-Shiromani-(Plan-No-947,-UIN-512N315V0

Policy Loan Loan facility is available under this plan, after payment of premiums for at least 1 full year’s premium has been paid and on completion of 1 policy year.

Taxation

As per LIC, “Taxes Statutory Taxes, if any, imposed on such insurance plans by the Government of India or any other constitutional tax Authority of India shall be as per the Tax laws.”