Buy South Indian Bank; target of Rs 11: Prabhudas Lilladher

Prabhudas Lilladher's research report on South Indian Bank

Earnings of Rs817mn (PLe: Rs488mn) was better than expected on lower provisions and better treasury income. NII growth was muted at 10% YoY but was largely in-line with expectations, while other income was helped by better treasury income but fees were down 9% YoY/20% QoQ. Provisioning levels came off to trends levels but continued to help improvement in PCR with asset quality being marginally better. Bank moratorium remain high at 36% but SMA loan within that is quite low which displays comfort but real picture will be visible post the moratorium ends.

Outlook

We retain BUY maintaining TP of Rs11 based on 0.5x Mar-22 ABV as valuations remain undemanding.

South Indian Bank 18072020-prabhu