Buy Lakshmi Vilas; target of Rs 112:Axis securities

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26 Aug, 2025 12:21

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Axis securities's research report on Lakshmi VilasLakshmi Vilas Bank (LVB) reported a strong Q3 with sustained margin and sharp sequential improvement in cost-income ratio. This along with stable headline GNPLs led to 42% YoY growth in PAT to Rs 461 mn. Going forward, management expects some pressure on margin (5-7 bps) as it moves to marginal cost of funding-based lending rates. Mr. Parthasarathi Mukherjee, who recently joined as MD & CEO, identified broad level strategies for the bank: (a) to focus on strengthening branches along with leveraging existing brand equity among LVB’s customers; (b) expand CASA significantly from current levels; (c) grow retail portfolio along with increasing card usage and digital channels; and (d) to work on mitigating other challenges which might arise on account of Payments and Small Finance Banks.We reiterate BUY with TP of Rs 112(20% upside), valuing it at 1.2x FY17E ABV of Rs 93. At CMP of Rs 93, LVB trades at 1.1x/1.0x FY16E/FY17E ABV of Rs 84/Rs 93.We believe, going forward, increase in CASA is likely to support NIM, which coupled with lower credit cost will drive RoA (0.8% by FY18).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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