ICICI Securities's research report on Karur Vysya Bank
Karur Vysya Bank (KVB) has reported yet another strong quarter with higher-than-expected Q4FY24 PAT of INR 4.56bn, driven by better-than-expected core NIM and strong other income, while asset quality remained comfortable. Reported Q4FY24 RoA was at multi-year high of 1.76%, driving FY24 RoA to 1.63%. Due to re- lassification of security receipts provisioning (INR 1.57bn), there is an optical rise in both other income and provisioning without any P&L impact. We highlight that KVB has amongst the lowest cost of deposits as well as lowest net NPA vs peers. It also scores well on consistency, profitable growth and quality of earnings.
Outlook
We revise our target price to INR 240 (INR 225 earlier), valuing the stock at ~1.5x (~1.4x earlier) FY26E ABV. Maintain BUY. Within smaller private banks, KVB ranks amongst the highest on FY25/26E RoA/RoE. Key risks: Higher-than-expected rise in opex and slower-than-expected deposits growth affecting profitability.
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