Buy Karur Vysya; target of Rs 658: Karvy

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Buy Karur Vysya; target of Rs 658: Karvy

Karvy Stock Broking is bullish on Karur Vysya Bank and has recommended buy rating on the stock with a target of Rs 658, in its February 2, 2010 research report.

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RELATED NEWS Karur Vysya Bank Q3 net profit up at Rs 75.9 cr ALSO READ See previous views by Karvy Stock Broking See what other Experts & Brokerages are saying about Karur Vysya See messages about Karur Vysya Karur Vysya BSE | NSE 30/05/12 Are Mutual Funds betting on Karur Vysya?

Karvy Stock Broking is bullish on Karur Vysya Bank and has recommended buy rating on the stock with a target of Rs 658, in its February 2, 2010 research report.

"In Q3FY10, Karur Vysya Bank's (KVB) net interest income grew by 29.3% (Y/Y) to Rs1.51 bn in-line than our estimates of Rs1.59 bn; during the quarter, KVB's margin increased by 5 bps (Q/Q) though remained lesser than Q3FY09's level of 3.57%. Based on balance-sheet numbers, yield on advances grew by 10 bps (Q/Q) to 12.36% but was lesser than Q3FY09's level of 13.56%; cost of deposits drifted down by 30 bps (Q/Q) to 7.6%. Liability-side management mainly contributed to the increase in NII and improvement in margin. During the quarter, total other income declined sharply by 50% (Y/Y) to Rs657 mn due to much lesser treasury income."

"KVB reported operating profit of Rs1.34 bn lesser than our estimates of Rs1.53 bn due to decline in treasury income. The bank reported 28% (Y/Y) growth in bottomline to Rs759 mn lesser than our estimates of Rs918 mn due to lesser treasury gains and higher operating overheads. During the quarter, KVB's total business grew by 29% (Y/Y) on the back of 27% growth in advances and 30% jump in deposits. We increase our FY10 and FY11 earning estimates by 3.5% and 18% respectively to factor in much higher volume growth in credits. We raise our target price by 10.3% to Rs658 from our previous price target of Rs597. At current market price, the stock quotes at 1.2x adjusted book value FY11, based on our target price the stock would trade at 1.95x ABV FY11. We rate the stock as a BUY with target price of Rs 658."

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