Karur Vysya Bank Ltd. share price target

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).

Deposits registered a stable growth (7.2%YoY, -2.5%QoQ) to INR 537bn, driven by CASA NII grew steadily by 22.7%YoY to INR 5.8bn lead by lower interest expense (-4.9%YoY) on account of fall in cost of funds. Increase in share of CASA aided NIM expansion as it increased by 49bps YoY to 4.04% amidst drop in cost of funds by 85bps YoY to 6.03% and...

Karur Vysya Bank (KVB) is one of the oldest private sector banks with strong presence in the Southern parts of India. More than 53% of KVB's 706 branches are located in Tamil Nadu, however it is gradually branching out in other parts of India also. KVB's earnings were impacted due to higher provisions and lower business growth, however, w..

Background: Karur Vysya Bank (KVB) is one of the mid-sized banks in the private sector space, operates through a network of 706 branches and about 1,711 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 3QFY17 the total business stood at INR 935bn. The bank is capitalized with a total CAR of 11.93% (Basel III). Gross NPAs were reported at 2.66% with provision...

Background: Karur Vysya Bank (KVB) is one of the mid-sized banks in the private sector space, operates through a network of 688 branches and about 1,693 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 2QFY17 the total business stood at INR 915bn. The bank is capitalized with a total CAR of 11.44% (Basel III). Gross NPAs were reported at 2.29% with provision...