Buy South Indian Bank; target of Rs 42: Anand Rathi

Anand Rathi's research report on South Indian Bank

Higher Treasury income and moderate opex offset SIB’s Q1 lower margins (down 18bps q/q), keeping overall operating performance stable. Q1 provisions were elevated (utilized for higher PCR). With stress from the legacy book largely recognized and further slippages normalising, the focus now shifts to profitability. We expect the bank to deliver a sustainable ~1% RoA in the medium term.

Outlook

We retain our Buy rating, with a 12-mth TP of Rs 42, 0.9x P/ABV on the FY27e book.