Buy Karur Vysya Bank; target of Rs 288: Anand Rathi

Anand Rathi's research report on Karur Vysya Bank

Decent operating performance combined with moderate provisions kept Karur Vysya Bank’s profitability strong, with 1.74% RoA (up 2bps q/q). Overall asset quality and PCR improved, with GNPA at 0.8% (down 27bps q/q) and NNPA at 0.2% (down 8bps q/q). Key positives were: 1) decline in slippages (at 0.7% of loans), 2) lowest stress pipeline among peers (SMA 30+ pool at 39bps), 3) strong credit growth in core retail (22% y/y) and SME (20% y/y) segments, 4) NIM persisting above 4% and 5) a strong balance sheet. With credit growth likely in mid-teens and modest credit costs, earnings are expected to be strong.

Outlook

We retain our Buy rating, with a 12-mth TP of Rs288, 1.5x P/ABV on the FY27e book.

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