ICICI Securities research report on Karur Vysya Bank
We hosted Karur Vysya Bank (KVB)’s senior management in Chennai. Investors discussions were centred around the SME portfolio’s health, especially export-oriented units amidst higher US tariffs and change, if any, in the operating environment for the SME units. KVB has conducted a thorough review of its SME portfolio. The overall Exposure at Impact (EAI) for all industries’ export to US is ~1.2% of the overall loans. Further, exposure to US, where US contributes to over 60% of annual turnover, is contained at 0.56% of the total loans. Within this, textile exposure (above 60% export to US) stands lower at ~0.3% of the loans. In our view, the first order impact appears manageable. Although we would closely monitor the second order impact, if any.
Outlook
Our estimates are unchanged. Maintain BUY with an unchanged TP of INR 267, valuing the stock at ~1.65x FY27E ABV. Key risk is adverse impact on portfolio quality as well as growth amidst macro uncertainties.
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