South Indian Bank can touch Rs 35: PN Vijay

South Indian Bank can touch Rs 35, says Portfolio Manager, PN Vijay.

Vijay told CNBC-TV18, "South Indian Bank is a very old smallish bank from the south. Their last quarter results have been pretty impressive. The net income went up by about 36% and net profits went up by 34%. Their net interest margin is slightly over 3%, which is slightly better than its usual run rate of about 2.9-3%, its 3.1%. On the balance sheet footing, the growth in gold loans has been very impressive. Gold loans have gone up by about 70%. In terms of capital adequacy they have got a 12, which is not bad, which is not very good."
He further added, "The gross NPAs which used to be above 2% three-four years ago now down to 0.9 and the net NPAs are 0.02, which means they have practically written off all their NPAs. The balance sheet footings are very strong. In terms of valuation, it is a small cap stock. It is quoting around 23 or so and it is about 6.5 times 2012 earnings."
"The price to book is slightly over 1 and the return on equity is also very good. The way the retail participation has been increasing in the market in the last few weeks, South Indian Bank could go on its fundamentals to about Rs 35. A caveat is, it is a small stock with not a great liquidity, so it is prone to operator manipulation."