Buy South Indian Bank; target of Rs 35: Edelweiss
Edelweiss is bullish on South Indian Bank has recommended buy rating on the stock with a target price of Rs 35 in its research report dated May 16, 2017.
Edelweiss' research report on South Indian Bank
Slippages shot up to INR 11.5bn (10.2% versus run-rate of 1.7% during past 3 quarters), with major part (>INR6bn slippages) flowing from watch-list and restructured standard advances (>INR 3bn slippages). Meanwhile, strong recovery (driven by sale to ARCs of INR 12bn) pull down GNPLs to INR 11.5bn (down >35% QoQ).
SIB’s performance was marred by volatile asset quality, largely on corporate side. But, the bank’s endeavour to de-risk its balance sheet by shifting to retail segment, an improving retail franchise and valuations at 0.9x FY19E P/ABV lend comfort. We roll over to FY19E earnings and peg our target price at INR 35 (INR 29 earlier). We maintain ‘BUY/SP’.
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