Reduce Karur Vysya Bank; target of Rs 201: Geojit Financial Services

Geojit Financial Services recommended Reduce rating on Karur Vysya Bank with a target price of Rs 201 in its research report dated January 06, 2025.

Broker Research

January 06, 2025 / 15:27 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Geojit Financial Services research report on Karur Vysya Bank

Karur Vysya Bank Ltd., an Indian private commercial bank headquartered in Tamil Nadu, operates 841 branches across India with a total business value of ₹176,138cr. KVB specializes in retail and corporate banking, as well as in treasury operations. The Net loans and advances witnessed a growth of 12.4% CAGR for FY21-24. We anticipate that loan growth rate has peaked and expect it to be at 11.5% CAGR for FY25-FY27E. KVB has posted a deposit growth of 10.8% CAGR for FY21-24. However, the CASA ratio has consistently decreased from 35% in FY22 to 30% in FY24. We expect the CASA ratio to stabilize at 30% for FY25-27E and deposit growth to increase to 11.6%CAGR for FY25-27E. GNPA/NNPA has dropped to 1.1%/0.3% from 7.9%/3.4% in FY21. However, the rise in Portfolio At Risk (PAR) 31-180 and PAR 181-360 in the MSME segment indicates that NPA ratios have bottomed-out, leading to expectations of more delinquencies.

Outlook

We believe the bank’s loan growth rate and return metrics have peaked. With the stock currently trading at a 1-year forward P/Bk of 1.3x, which is near its all-time high valuation compared to its long-term average of 1x, we do not foresee further improvement in the stock. Therefore, we initiate coverage with a REDUCE rating, valuing the stock at 1.1x BVPS FY27E with a target price of Rs. 201.

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