Accumulate Karur Vysya Bank; target of Rs 83: KR Choksey

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

KR Choksey's research report on Karur Vysya Bank

Advances grew during Q4FY19 at 8.4% YoY/1.71% QoQ. Deposit mobilization was slow with a growth of 5.2% YoY/2.1% QoQ. NII at INR 619 Cr. is down 3.7% YoY/ up 6.6% QoQ. NIMs stood at 3.89%, a decline of 24 bps YoY/ up 32 bps QoQ. Total Income at INR 892 Cr. is up 4.7% YoY/6.1% QoQ. PPOP at INR 465 Cr is down 3.1% YoY/ up 9.4% QoQ on back of declining NIMs. The bank has provided for INR 352 Cr of net provisions during the quarter, down 10.6% YoY/ down 12% QoQ translating in credit costs of 4.18%, an increase of 174 bps YoY / 1 bps QoQ. Asset quality improved with GNPAs at 8.79%, increasing by 223 bps YoY / 30 bps QoQ while NNPAs at 4.98% was 82 bps higher on annual basis and 1 bps better sequentially. PCR stood at 56.9%. PAT at INR 60 Cr is up by 18% YoY/ 183% QoQ, translating into ROA of 0.35% on account of lowering of provisions. The board declared dividend of INR 0.60 per equity share of face value of INR2 for FY19.

Outlook

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.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More