2 KARURVYSYA share price target reports by brokerages below. See what is analyst's view on KARURVYSYA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
While our estimates remain unchanged, as the impact of this event is difficult to disaggregate and model, we downgrade the stock, yet again, to NEUTRAL, (our BUY was premised solely on inexpensive valuations, ~1x FY21E). Our revised TP is Rs 64 (1xDec-21 ABV of Rs 64).
Sharpening focus on the Retail segment and taking a cautious stance by slowing down advances to the Corporate and SME segment while building revenue as well as profit momentum (loan/PAT CAGR of 9%/79%, respectively, over FY19- 21E) and transformation into a granular and higher RoE business combined with cheap valuations at 1.2x FY21E ABV provides decent scope for re-rating in the long term. However, continued elevated stress in the Corporate and SME books combined with higher credit costs in order to shore up the PCR, should translate to sub optimal ROA in FY20E. We maintain our ‘HOLD’ rating on the stock with a price target of Rs. 80, based on 1.3x FY21E ABV (20% discount to DCB).
Bargain emerges Elevated slippages (as guided) and stunted growth made for an in line qtr. With most of the bad news priced in (and no more of it expected), we UPGRADE TO BUY (TP of Rs 87, 1.4x Jun-21E ABV of Rs 62).
KVB shares are currently trading at a P/Adj.BV multiple of 1.05x/1.00x on FY20E/FY21E adj. book value and we expect the valuation of the bank to remain stressed on the back of poor ROE (average 5.5% for FY20/21), asset quality risks and slow balance sheet growth. We apply a P/Adj.BV multiple of 1.1x to the FY21 adj. BVPS of INR 66 to arrive at a revised target price of INR 73 per share, an upside of 10.4% over the CMP. Accordingly, we reiterate an “ACCUMULATE” rating.
We expect the management to continue focus on retail loan segment in the coming future and the housing loans among it to drive the bulk of the growth in the next few years. However, apart from serving own bank account customers (since, 80% of retail loan customers are bank customers of KVB), the retail lending segment is highly competitive with other existing players exhibiting even faster growth, we believe the size of retail loan segment will take longer than the management’s expectation. Hence, we foresee the assets to grow faster in the future with focus on retail, but tighter lending on corporate & commercial loan segment will keep the growth in the higher-single digits. Karur Vysya Bank is currently trading at a P/Adj.BV multiple of 0.90x/0.81x on FY20E/FY21E adj. book value and we expect the valuation discount for the bank to continue on the back of weak ROE outlook (average 4.8% for FY20/21). We apply a P/Adj.BV multiple of 1.3x to the FY21 adj. BVPS of INR 66 to arrive at a target price of INR 83 per share, an upside of 10.6% over the CMP. Accordingly, we assign an “Accumulate” rating.
Sharpening focus on the retail and SME segments while building revenue as well as profit momentum (loan/PAT CAGR of 15%/97%, respectively, over FY19-21E) and transformation into a granular and higher RoE business combined with cheap valuations at 1.3x FY21 ABV provides decent scope for re-rating in the long term. However, continued elevated stress in the corporate and SME books combined with higher credit costs in order to shore up the PCR, should translate to sub optimal ROA in FY20E. We maintain our ‘HOLD’ rating on the stock with a price target of Rs. 94, based on 1.6x FY21E ABV (33% discount to CUB).
Sharpening focus on the retail and SME segments while building revenue as well as profit momentum (loan/PAT CAGR of 14%/85%, respectively, over FY19-21E) and transformation into a granular and higher RoE business combined with cheap valuations at 1.2x FY21 ABV provides decent scope for re-rating. However, continued elevated stress in the corporate & SME book should result in the bank recognizing this pending stress which would mean elevated credit costs for FY20E. We thus revise our rating to ‘Hold’ on the stock with a price target of Rs. 90, based on 1.5x FY21E ABV (33% discount to CUB).
Gross slippage guidance was ~Rs 18.5bn (Corp Rs 7.5bn and SME Rs 10bn) with recoveries of a mere ~Rs 7.5bn for the next 5 qtrs. Our calculations suggest that SME GNPAs could cross ~8% while Corp GNPAs would remain at +20% levels. The emergence of previously unidentified stress and the ability of the P&L to support aggressive provisioning aspirations warrant serious concern. Downgrade the stock to Neutral (even after the steep fall). Revise TP to Rs 77 (1.4x Dec-20E ABV of Rs 55.4).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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