Add Karur Vysya Bank, target price Rs 63: HDFC Securities

HDFC Securities has add call on Karur Vysya Bank with a target price of Rs 63. The current market price of Karur Vysya Bank is Rs 46.5. Time period given by analyst is one year when Karur Vysya Bank Ltd. price can reach defined target.

Karur Vysya Bank Ltd., incorporated in the year 1916, is a banking company (having a market cap of Rs 3716.44 Crore).

Karur Vysya Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 1614.75 Crore, up .91 % from last quarter Total Income of Rs 1600.12 Crore and up 3.13 % from last year same quarter Total Income of Rs 1565.78 Crore. The bank reported net profit after tax of Rs 213.47 Crore in latest quarter.

Investment Rationale
Karur Vysya Bank (KVB) reported a significant beat on estimates, led by better NIMs and lower credit cost (1.1% annualised). Asset quality improved, with GNPA at ~6%, led by negative net slippages, while the restructured pool remained largely steady at ~2.8% of loans. Overall loan growth (+9% YoY) was driven by commercial (+12%), agri (+13%) and home loans (+9%). KVB is incrementally focused on driving granular growth (LAP, commercial banking, and other retail) and has guided for a 12% loan growth in FY23. With a steady NIM trajectory and improving line of sight on lower credit costs, KVB is wellplaced to inch closer to its ~1% RoA target. We trim our FY23/FY24E earnings estimates by 1%/3% to factor in lower loan growth, partly offset by lower credit costs. Maintain ADD with a revised TP of INR63

Promoter/FII Holdings
Promoters held 2.28 per cent stake in the company as of 31-Mar-2022, while FIIs owned 15.35 per cent, DIIs 21.89 per cent.