Buy South Indian Bank; target of Rs 40: ICICI Securities

ICICI Securities is bullish on South Indian Bank has recommended buy rating on the stock with a target price of Rs 40 in its research report dated July 20, 2025.

Broker Research

July 23, 2025 / 14:07 IST

BUY

26 Aug, 2025 12:21

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ICICI Securities's research report on South Indian Bank

South Indian Bank (SIB) reported a better-than-expected Q1FY26 with PAT of INR 3.2bn (5% beat) and a sharp improvement in asset quality. Despite NIM headwinds (down 18bps QoQ), SIB sustained ~1% RoA for the eighth consecutive quarter, aided by strong other income. The bank has prudently utilised its bumper treasury gains (~75bps of assets) towards shoring up PCR (up ~700bps to 79%) and paring net NPA (to 68bps), which enhances the visibility towards healthy profitability ahead. We believe an acceleration in core MSME growth is critical for NIM/RoA progression and the stock’s re-rating. SIB has a healthy liability franchise, though continued loan mix should keep overall CAGR contained at ~12% for FY25–27E. CET 1 stood strong at 18.25%. On balance, we maintain BUY with a revised TP of INR 40.

Outlook

Maintain BUY with a revised TP of INR 40 (INR 37 earlier), valuing the stock at ~0.9x FY27E ABV (0.8x earlier). Key risk is slower-thanexpected growth in its core MSME segment.

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