The RBI has approved the candidature of Mr P R Seshadri (ex MD & CEO of Karur Vysya Bank) as MD & CEO of South Indian Bank (SIB) for three years with effect from 1 st Oct’23. In our view, Mr Seshadri was instrumental in putting newage lending practices, overhauling risk architecture and transforming HR practices at Karur Vysya Bank (KVB) during his term (Sep’17-Mar’20), a time when the banking system was undergoing severe profitability pressure due to corporate asset quality cycle. We believe the ongoing transformation journey at SIB, initiated by incumbent MD & CEO, Mr. Murali Ramakrishnan, should get accelerated. SIB trades at an inexpensive ~0.65x FY25E ABV.
OutlookWe raise our target multiple from ~0.7x to ~0.8x and our target price to INR 28 (vs INR 25). Maintain BUY.
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