Comments
Target: ₹200
CMP: ₹183.70
Karur Vysya Bank continued with its superlative performance, led by healthy credit growth, higher margins (up 25 bps q-o-q, including 19 bps from one-off lumpy corporate recovery), and steady improvement in asset-quality performance (the GNPA ratio was down 15 bps q-o-q to 1.6 per cent), leading to an 8 per cent PAT beat at ₹410 crore (Emkay est. ₹380 crore).
However, staff costs were significantly high due to the bank’s continued business expansion and recent wage revisions. As per management, investment in AIF stood at ₹11 crore with no step-down exposure and, thus, no need to make any provisions. Management reiterated its focus on sustainably delivering higher profitability (>1.5 per cent RoA) instead of chasing growth.
We expect Karur Vysya Bank to register its decadal best RoA/RoE at 1.5/16 per cent in over FY24-26, led by healthy NIM/fees and contained LLP. We retain our Buy rating on KVB with a revised TP of ₹200/share (vs. ₹185/share), rolling forward to 1.3x Dec-25E ABV.
Key risks: Slower-than-expected growth, a faster decline in CASA leading to cost pressure, and a resurgence of NPAs in the retail/SME sector due to macro-dislocation.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.