Buy Karur Vysya Bank; target of Rs 598: Firstcall Research

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Buy Karur Vysya Bank; target of Rs 598: Firstcall Research

Firstcall Research is bullish on Karur Vysya Bank and has recommended buy rating on the stock with a target of Rs 598 in its December 21, 2010 research report.

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Firstcall Research is bullish on Karur Vysya Bank and has recommended buy rating on the stock with a target of Rs 598 in its December 21, 2010 research report.

"The Karur Vysya Bank carries with it a tradition of 94 years and yet is young enough to adapt itself to the rapidly changing scenario in the banking industry. Karur Vysya Bank ltd's net income during Sept Quarter is of Rs 5183.80 million from Rs 4339.70 million with a change of 19.45%. The Net Interest Margin from 3.06% to 3.30%. The growth in net profit came on the back of a 38.17% year-on-year growth in Net Interest Income. Net Interest Income stood at Rs 344.81 crore against Rs 249.55 crore in H1. The Bank is adequately capitalized with a capital adequacy ratio of 13.38% (Basel II). During the quarter the bank has issued bonus shares and right issues. The bank has Provision Coverage Ratio at 87.28% as against the regulatory stipulation of 70%. Equity capital has been increased by 41.26% from Rs 539.50 million to Rs 762.10 million."

"Karur Vysya Bank ltd has reported a stand alone results for Sept Quarter 2010 with net income of Rs 5183.80 million from Rs 4339.70 million with a change of 19.45%. The net interest income during the quarter stood from Rs 1972.40 million to Rs 2523.30 million resulting a change of 27.93%.The operating profit stood at Rs 1450.70 million against 1171.30 million with a change of 23.85%. The net profit for the quarter stood at Rs 1026.00 million from Rs 909.00 million at a change of 12.87%. Equity capital has been increased by 41.26% from Rs 539.50 million to Rs 762.10 million affecting the EPS which stood at 13.46 for Sept quarter 2010.The NIM for the quarter is 3.06% to 3.30%."

"At the market price of Rs 520, the stock trades at 5.31 x and 4.61 x for the earnings of FY11E and FY12E respectively. Price to Book Value of the stock is expected to be at 1.32 x and 1.03 x respectively for FY11E and FY12E. Earning per share (EPS) of the bank for the earnings of FY11E and FY12E is seen at Rs 62.08 and Rs 71.49 respectively for equity share of Rs 10 each. Net Profit for the Sept quarter stood at Rs 1026 millions with an increase of 12.87 %. Net Income and PAT of the bank are expected to grow at CAGR of 21 % & 32% over FY09 to FY12E. As there was consistent growth and stable asset quality we recommend 'BUY' in this particular scrip with a target price of Rs 598 for Medium to Long term investment," says Firstcall Research Report.

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To read the full report click on the attachment