Karur Vysya Bank Ltd. share price target

Maintain BUY with a TP of Rs 156 (2x Mar-20E ABV of Rs 78). KVBs 4Q results were along expected lines. Slippages were elevated (5% ann.) leading to a YoY doubling of GNPAs (6.56%, +62bps QoQ). Credit costs also jumped (376bps ann.). On the flipside, NIMs were steady (3.7%, down 6bps) despite adjusting for the one-off. Robust fee growth (+30% YoY), sustained CASA accretion (+12% YoY) and a mere 2% hike in opex (despite gratuity of Rs 260mn) were heartening.

Karur Vysya Bank reported weak numbers in Q3 after showing some signs of recovery in the preceding quarter. While advances growth improved to 16.6% YoY (11.0% in Q2 & 7.7% in Q1); gross NPAs increased substantially by 111bps on QoQ basis to 5.94%. The net interest income (NII) growth was muted at 8.5% led by interest reversals. However, pre-provisioning profit (PPP) grew at a healthy pace of 25.7% mainly due to 32.2% increase in non-interest income. Net profit continued to decline further down 38.2% YoY (5.5% QoQ). Recommendation: We have been maintaining Neutral rating on KVB due to...

Sector: Banking /Small-Cap | Earnings Update 3QFY18 Background: Karur Vysya Bank (KVB) is one of the mid-sized banks in the private sector space, operates through a network of 773 branches and about 1,777 ATMs. KVB's business - 82% is concentrated in South India with about 73% of its branch footprint in Tamil Nadu and Andhra Pradesh. As of 3QFY18 the total...

Maintain BUY with a TP of Rs 151 (2x Dec-19 ABV of Rs 76). KVBs 3Q results were on expected lines. GNPAs jumped to 5.94% (up ~320/110bps YoY/QoQ) and credit costs spiked (274bps ann. vs. 91bps YoY) leading to a net earnings dip of 38% YoY. However loan growth sustained the uptrend (+17%) and NIMs held up at 3.76%. The sequential reduction in average ticket size of commercial (16%) and corp. (5%) loans is an early indicator of the managements execution capabilities. No meaningful addition to the watchlist was an additional positive.

Initiate coverage with a BUY. Our TP of Rs 154 is based on a relatively inexpensive target multiple of 2.0x Dec-19 ABV of Rs 77. Karur Vysya Bank (KVB) is a regional PVT bank in Southern India, with a tilt towards SME lending. Despite this lucrative franchise, KVBs misplaced aggression in big ticket Corporate lending (18% loan CAGR over FY11-14) and the subsequent stress has led to a visible stumble in stock returns. Over the trailing five years, KVBs shareholders have earned 5% CAGR vs 16% on FB and 28% on CUB. KVB enjoys comparable Retail and SME franchise (ergo pricing power) and the benefits of granularity.

Karur Vysya Bank (KVB) disappointed as profitability declined (PAT down 48/49% YoY/QoQ to Rs 75cr) on credit costs (+2%) remaining elevated in Q2FY18. Asset quality deteriorated with G/NNPAs up 53/39bps sequentially to 4.8/3.2%. Slippages stood at Rs 426 cr (4% annualized; 3.8% in Q1FY18).

Sector: Banking /Small-Cap | Earnings Update 2QFY18 Background: Karur Vysya Bank (KVB) is one of the mid-sized banks in the private sector space, operates through a network of 752 branches and about 1,766 ATMs. KVB's business - 82% is concentrated in South India with about 73% of its branch footprint in Tamil Nadu and Andhra Pradesh. As of 2QFY18 the total...

KVB's 1QFY18 results were in line with expectations. While PAT remained flat YoY and loan growth remained 7.7%, overall growth should pick in 2HFY18. While slippages were high during the quarter, they were largely from the watch list. Next two quarters could be challenging but FY19 looks much stronger for the bank. While credit cost will ..

Asset Quality deteriorated with GNPAs increasing sharply by 69bps QoQ to 4.27% and NNPAs increased by 32bps QoQ to 2.85%. This sharp increase was majorly on account of slippages from the corporate book. Outstanding restructured loans stands reduced to INR 8.1bn (1.91% of advances) vs. INR 8.4bn in 4QFY17. Total outstanding SDR loan accounts...

Karur Vysya Bank (KVB) reported strong profits of Rs.218 cr which grew by 58% YoY (up 88% QoQ) due to profit on sale of investments of Rs.78 cr. Loan growth improved to 5% YoY in FY17 as against 2% YoY in 9MFY17 led by growth in commercial book (up 13.6% YoY).