Accumulate South Indian Bank; target of Rs 32: Geojit Financial Services

Geojit Financial Services recommended accumulate rating on South Indian Bank with a target price of Rs 32 in its research report dated July 26, 2024.

Broker Research

July 26, 2024 / 12:39 IST

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Geojit Financial Services research report on South Indian Bank

South Indian Bank, is a private sector bank headquartered in Kerala. The bank has 955 branches, with majority of them in South India. Currently, the bank has a loan book size of Rs.82,580cr and a deposit base of Rs.103,532cr. The bank reported strong Q1 results, with key business parameters such as advance growth, asset quality, and PCR showing improvement. Advances have remained strong, growing 11%YoY during Q1FY25, driven by strong disbursements in corporate book. PAT grew by 46%YoY, aided by strong growth in fee income and lower provisions. Additionally, NIM stabilized at 3.4% as stress from the cost of deposits was passed on. Asset quality improved, with GNPA/NNPA at 4.5%/1.4%. The Provision Coverage Ratio (PCR) increased to 79.2% compared to 76.5% in Q1FY24. With stress from legacy books decreasing, the focus now shifts to profitability.

Outlook

We expect the bank to deliver more than a 1% ROA in the medium term. We give an Accumulate rating with a target price of Rs.32 based on 0.75x FY26E BVPS .

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