Buy Karur Vysya Bank; target of Rs 282: Anand Rathi

Anand Rathi's research report on Karur Vysya Bank

Strong operating performance, combined with moderate provisions kept Karur Vysya Bank’s profitability robust, with 1.73% RoA (down 1bp q/q). Headline asset quality remained stable, with GNPA at 0.76% (down 7bps q/q) and NNPA at 0.2% (stable q/q). Key positives were: 1) slippages under 1% (at 0.9% of loans), 2) the lowest stress pipeline among peers (SMA 30+ pool at 30bps), 3) strong credit growth in core SME (21% y/y) and retail (18% y/y) segments, 4) NIM persisting above 4% and 5) a strong balance sheet. With credit growth likely higher than the system and modest credit costs, earnings are expected to be strong.

Outlook

We retain our Buy, with a 12-mth TP of Rs 282, 1.5x P/ABV on the FY27e book.