Karur Vysya Bank reported a bit of mixed results in 2QFY21 with 80% yoy earnings growth

Chirag Batavia • Dec 07, 2020

Karur Vysya Bank

 KVB reported a bit of mixed results in 2QFY21 with 80% yoy earnings growth (off a weak base) but operating profit growth was weak at 4% yoy as provisions declined 22% yoy. Net interest income was flat yoy but grew impressively by 7% qoq as net interest margins improved 10 bps qoq to 3.5%

 In 2QFY21, headline asset quality ratios showed improvement with gross NPLs (Non-performing loans) declining 40 bps qoq at 7.9% while net NPL declined 45 bps qoq to 3% of loans (a four-year low)

 Operating performance is weak but the bank has negotiated the Covid environment with a relatively slow growth, which augurs well. Tier-1 ratio at 16% is comfortable to handle the stress but a rerating would probably take more than a few quarters

 We expect earnings growth of 39% in FY22E & 42.7% in FY23E. Net interest income growth of 9.6% in FY22E & 10.6% in FY23E with Net interest margins of 3.5% in FY21E-FY23E.

 KVB currently trades at an inexpensive valuation & significant discount to peers of ~0.48X FY22 expected book value. We are valuing the bank at 0.9X book and ~10X September 2022E EPS for RoEs of ~10% levels in the medium term
  

Karur Vysya Bank (KVB): BUY
Dated: 7th December 2020
CMP: Rs.38
Fair Value: Rs.65
Potential Upside: 71%
Market Cap: 3,017 Cr
Time Frame: 12 months

Note: The above is a brief note on the company, based on the inputs of KIE research report dated 2nd November, 2020, which is available on their website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental.       
Disclaimer: http://bit.ly/2n5AxIE



Looking to invest in Karur Vysya Bank Ltd and other Indian stocks? Open your trading account with Lakshit Financial

Lakshit Financial Authorized Person of Kotak Securities Limited in cash segments of BSE & NSE and NSE F&O segments with NSE. Lakshit Financial registration number: BSE CASH AP0106730124228 | NSE CASH AP029177621 | NSE F&O AP029177621.Registered Office: Lakshit Financial, ASM 7, Ashwin Sector, Mumbai Agra Highway, CIDCO, Nasik 422009, Maharashtra, India. Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051. SEBI Registration No. INZ000200137 (Member of NSE, BSE, MSE, MCX & NCDEX). Member Id: NSE-08081; BSE-673; MSE-1024; MCX-56285; NCDEX-1262. AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please refer the Risk Disclosure Document issued by SEBI and go through the Rights and Obligations and Do's and Dont's issued by Stock Exchanges and Depositories before trading on the Stock Exchanges.

As an NR I , you can invest in IPOs and purchase shares, ETFs or convertible debentures of an Indian company through stock exchanges. All it takes is linking your NRO or NRE account to an active Demat account in India on a repatriable or non-repatriable basis, based on your requirements. Click here to learn more about NRI Trading and Demat Accounts.

OPEN YOUR ACCOUNT NOW !

Fill in your details and we will get in touch with you.

Products and services available only for People of Indian Origin

Note:  Please note that by submitting the above mentioned details, you are authorising Lakshit Financial to call you and send promotional communication even though you may be registered under DNC. Also, all calls with Lakshit Financial representatives may be recorded for internal quality & training purposes

Share by:
gtag('config', 'AW-634979631');