Buy Karur Vysya Bank; target of Rs 300: Emkay Global Financial

Emkay Global Financial' research report on Karur Vysya Bank

Karur Vysya Bank (KVB) continued to report a robust performance, with PAT at Rs5.1bn and peer-best RoA at ~1.7%, which the bank guides to uphold, aided by healthy operating profitability and contained credit cost. Credit growth softened to 14% YoY/2% QoQ owing to strategic slowdown in the high-risk portfolio (BNPL, VF, PL) and low-yielding corporate book. Reported NIM was broadly stable at 4.05% owing to rebalancing of the portfolio toward better yielding, granular, secured retail advances. Asset quality continues to hold up well, with slippages contained at 1% of loans, leading to peer-best GNPA/NNPA ratio at 0.8/0.2% of loans. The bank targets clocking credit growth of 200bps above the industry’s and margins moderating to 3.7–3.75% given policy rate cuts. We broadly maintain our FY26-27 estimates and expect KVB to deliver RoA/RoE of 1.6–1.7%/16–18% over FY26–28E, backed by strong RoA, asset quality, capital/provision buffers, and stable management.

Outlook

We reiterate BUY on KVB with TP of Rs 300, valuing the bank at 1.5x Mar-27E ABV.