Karvy Stock Broking has given a market performer rating on Karur Vysya Bank with a target of Rs 888 in its September 13, 2010 research report.
"Karur Vysya Bank has been rewarding its shareholders with bonus and right issues in past as well; in FY2003, the bank had issued bonus and right shares each in a ratio of 1:1 and in FY2007, the bank again came out with bonus-cumright issue of 1:1 ratio and 1:2 ratio respectively. On the back of the right issue, the bank would get total tier I capital of Rs 4.3 billion and the bank's equity capital would increase from Rs 540 million to Rs 1.07 billion. We increase our FY11 and FY12 earning estimates by 7.3% and 10.6% respectively and raise our target price (unadjusted for bonus & right issue) by 18.5% to Rs 888 at 1.8x ABV FY12. We arrive at adjusted target price of Rs 452 and revise the stock to Market Performer from earlier BUY rating. At current price of Rs 806 (adjusted price of Rs 411), the stock would trade at 1.63x ABV FY12," says Karvy Stock Broking research report.
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