Motilal Oswal is bullish on South Indian Bank has recommended buy rating on the stock with a target price of Rs 31 in its research report dated May 16, 2017.
Motilal Oswal 's research report on South Indian Bank
SIB reported PAT growth of -32%/+4% QoQ/YoY. NII grew 5%/11% QoQ/YoY on the back of 5%/13% advances growth as NIM remained flat YoY and expanded 8bp QoQ to 2.74%. Opex growth was controlled at -1%/+2% QoQ/YoY, and the CI ratio stood at 51.3%. However, elevated provisions (+42% YoY) eroded 26% PPoP growth to result in 4% YoY PAT growth.
In view of asset quality improvement and lower expected provisions, we observe a sharp upside to our earlier RoA/RoE estimates and upgrade the stock to Buy with a TP of INR 31 (1.0x Mar-19E BV, increase in multiple over earlier 0.6x Dec-18 BV in view of stressed asset resolutions leading to faster-than-expected improvement in RoA/RoE).
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