SOUTHBANK share price target reports by brokerages below. See what is analyst's view on SOUTHBANK 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.
Earnings of Rs817mn (PLe: Rs488mn) was better than expected on lower provisions and better treasury income. NII growth was muted at 10% YoY but was largely in-line with expectations, while other income was helped by better treasury income but fees were down 9% YoY/20% QoQ. Provisioning levels came off to trends levels but continued to help improvement in PCR with asset quality being marginally better. Bank moratorium remain high at 36% but SMA loan within that is quite low which displays comfort but real picture will be visible post the moratorium ends. We retain BUY maintaining TP of Rs11 based on 0.5x Mar-22 ABV as valuations remain undemanding.
Despite decent NII growth of 19% YoY, higher provisioning on account of COVID-19, MTM requirements on certain SR exposure and PCR enhancement to 34.1% (up 315bps YoY and 225bps QoQ) to maintain asset quality, adversely impacted profits leading to a loss of Rs 1.4bn. The bank has a strong Retail/MSME loan book also supported by a growing Gold Loan book, improving operations and has raised Rs5bn of capital (AT-1 bonds) but higher provisions for PCR enhancement as well as COVID impact will keep earnings growth restricted, plus we remain watchful of Asset Quality. We retain BUY maintaining TP of Rs11 based on 0.5x Mar-22 ABV as valuations remain undemanding.
Focus on improving coverage ratio is seen keeping earnings muted in the near term. As the bank’s retailisation increases pace, earnings are poised to improve ahead. Going ahead, with anticipated slower pace of improvement in return ratios, we downgrade our target price to Rs 12/share, valuing the bank at 0.3x FY21E ABV. Accordingly, we downgrade the stock from BUY to HOLD. The bank is expected to raise capital to shore up capital adequacy, which remains an upside risk to our target price.
We have revised our NII estimates by 1.2%/2.9%/0.8%, PPOP estimates by 2.3%/- 1.0%/-5.0% and PAT estimates by 9.9%/3.1%/-4.6% for FY20/FY21/FY22, respectively. We have retained Buy rating on SIB, revising our target price to Rs14 (from Rs 13 earlier), valuing the stock at 0.4x H1FY22E P/BV.
SIB’s earnings were in-line with expectations with PAT at Rs 906mn (PLe: Rs 916mn) with decent growth in NII of 16% YoY on back of improved NIMs of 2.72% while provisions rose on back of slippages and PCR enhancement which rose to 31.8% (up 347bps YoY and 154bps QoQ) helping maintain asset quality. A strong Retail/MSME loan book with operations getting steadier, but higher provisions for PCR enhancement will keep earnings growth limited and we continue to watch for the capital raise and retain BUY maintaining TP of Rs18 based on 0.8x Sep-21 ABV as valuations remain undemanding.
We have revised our NII estimates by 2.3%/-1.4%/-2.3%, PPOP estimates by 5.2%/- 1.2%/-1.5% and PAT estimates by -3.8%/-0.8%/-0.3% for FY20/FY21/FY22, respectively. We have retained Buy rating on SBL, retaining our target price at Rs13 and valuing the stock at 0.4x H1FY22E P/BV.
SIB’s asset quality has been volatile, but better managed than peers (<6% stress pool).The bank’s endeavour to de-risk the balance sheet by shifting to retail could abate volatility in our view. That said, sustained delivery is critical to restore investor confidence. The stock is trading at 0.4x FY21E P/BV, implying limited downside potential. We maintain ’BUY/SP’.
SIB’s earnings were slightly above expectations with PAT at Rs845mn (PLe: Rs828mn) on better operating performance. Decent growth in NII of 15% YoY on back of rise in NIMs of 16bps QoQ and much stronger other income driven by treasury led to beat in PPOP. Although, provisions rose on back of lumpy slippage (textile industry) and higher write-offs leading to lowering in PCR to 30%from 32.3% (incl. technical w.off up 300bps QoQ to 48.1%) but helping maintain asset quality. With incorporating some of the stress assets and required provisions book value hits are not large but earnings & ratios improvement will be very gradual. We retain BUY with revised TP of Rs18 (from Rs20) based on 0.8x Sep-21 ABV as valuations remain undemanding.
With the banks focus on improving retail mix, we expect the asset quality to improve going forward. However, we are bit cautious on an increase in SMA2 accounts and we don’t expect a considerable decline in cost of funds in near to medium term. Hence, we reduce our valuation to 0.45x BV of FY21E (from previous 0.5x) with a revised downward target price of Rs13.9 and downgrade our rating to Hold.
We have revised our NII estimates by 0.4%/0.4%, PPOP estimates by 1.2%/0.4% and PAT estimates by -0.3%/2.3% for FY20/FY21, respectively. We have retained Buy rating on SBL, revising our target price on it to Rs15 (from Rs15 earlier) and valuing the stock at 0.5x FY21E P/BV.
SIB’s earnings were marginally below expectations with PAT at Rs733mn(PLe: Rs890mn) as operating performance is improving only gradually. Provisions came in lower as slippages of Rs2.41bn was lower sequentially which helped stable asset quality but marginally lift PCR to 32.3% (45.1% incl. technical w.off). Bank is closely monitoring some of the dispensation related loans restructured during Kerala floods but does not see large risks from same. Structurally PCR remains lowest in peer group which has to be stepped up, which should be helped by improving operations. We maintain BUY with TP of Rs18 (unchanged) based on 0.8x Mar-21 ABV.
We have revised our NII estimates by -13.3%/-12.8%, PPOP estimates by - 10.8%/-7.5% and PAT estimates by -9.6%/-8.7% for FY20/FY21, respectively. We have retained Buy rating on SBL, revising our target price on it to Rs20 (from Rs21 earlier) and valuing the stock at 0.6x FY21E P/BV.
SIB’s earnings were below expectations on back of (i) Muted NII on sharp decline in NIMs and (ii) continued provisions to improve PCR and provide on fresh slippages. Slippages in most segments were lower barring Agri and one a/c in corporate (from medical college in Kerala). SMA-2 book came off further to 1.71% from 2.2% in Mar’18. PPOP growth of 5.4% YoY was supported by better other income, while expenses control though helped are not reflecting in ratios. Management has to significantly work on improving PCR which stood at 31% (42.5% incl. technical w.off) and hence credit cost will remain high, while has to also work on improving pricing power to improve NIMs. Stock trades at 0.7x Mar-21 ABV which is cheap especially given the asset quality issues will be lower. We maintain BUY with TP of Rs18 (from Rs22) based on 0.8x Mar-21 ABV (rolled over from 1.0x Sep-20).
SIB is focused on improving the granularity in its loan book along with strengthening its fee income and margin profile. With its balance sheet getting significantly cleansed and slippages in Agri/SME/Retail segment benign, we expect operating performance to improve, though lower PCR remains an overhang. We also expect SIB to benefit from any M&A activities taking place in other small private banks. We have a Buy with a target price of Rs 20.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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