Karur Vysya Bank jumps 4% after RBI greenlights SBI Mutual Fund's 10% stake buy

Over the past three months, the stock, based in Tamil Nadu, has risen by over 67 percent

Shares of Karur Vysya Bank surged by over 4 percent to Rs 231 on August 26 after the Reserve Bank of India (RBI) approved SBI Mutual Fund's (SBI MF) acquisition of up to 9.99 percent of the bank's paid-up share capital or voting rights.

This approval comes with conditions, including compliance with the Banking Regulation Act of 1949, guidelines on share acquisition, and the Foreign Exchange Management Act, 1999.

The bank clarified that SBI MF must acquire the majority shareholding within a year from the date of the RBI's approval, else the approval will be revoked.

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SBI MF must also ensure its shareholding in Karur Vysya Bank does not exceed 9.99 percent of the bank’s paid-up share capital or voting rights. If their shareholding drops below 5 percent, SBI MF will need to obtain fresh approval from the RBI to increase its stake again.

In the June quarter, Karur Vysya Bank reported a 27.86 percent year-on-year growth in net profit, reaching Rs 459 crore compared to Rs 359 crore a year ago. The bank's net interest income also grew by 14.27 percent year-on-year to Rs 1,025 crore in Q1FY25, up from Rs 897 crore. However, the net interest margin decreased slightly to 4.13 percent, down 6 basis points year-on-year, due to rising deposit costs, which increased by 52 basis points to 5.48 percent in Q1FY25.

Currently, 11 brokerage firms are covering the stock, with 10 recommending a 'Buy' on Karur Vysya Bank and one recommendation of a 'Hold.'

Over the past three months, the stock of the Tamil Nadu-based lender has risen by over 67 percent, significantly outperforming the Nifty 50's 9 percent gain.

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