Subscribe to PRO at just Rs.33 per month. Use code SUPERPRO
Last Updated : Jun 27, 2020 11:44 AM IST | Source: Moneycontrol.com

Reduce Karur Vysya Bank; target of Rs 33: HDFC Securities

HDFC Securities recommended reduce rating on Karur Vysya Bank with a target price of Rs 33 in its research report dated June 25, 2020.

Broker Research
  • bselive
  • nselive
Todays L/H

HDFC Securities' research report on Karur Vysya Bank

GNPAs dipped 5.3/4.8% to Rs 42.1bn (8.7%), and were aided by w/os of ~Rs 3.5bn (mostly in corporate loans) and ARC sales of ~Rs 0.9bn. However, this improvement was optical, due to the standstill classification benefit of Rs 1.95bn, adjusted for this GNPAs would’ve been flattish YoY/QoQ. Further, slippages remained elevated at 3.6% ann., with gross corporate slippages at 7.8%, and gross SME slippages at 3.3%. Performance of the retail and agri portfolios was relatively satisfactory. While the management guides for slippages of 1.75-2.5%, we conservatively build slippages of 3.5% over FY21-22E, owing to extrinsic factors and the moratorium % (esp. in the commercial banking segment).


KVB’s 4Q earnings were ahead of our estimates. However, a look at the fine print reveals that (1) a sharp rise in treasury gains boosted earnings and (2) high w/offs and the standstill classification optically curtailed GNPAs. The sharp fall in deposits was inexplicable. We maintain REDUCE with a TP of Rs 33 (0.54xFY22E ABV). Our stance is premised upon, the (1) leadership void and corresponding uncertainty, and (2) weak performance outlook.

For all recommendations report, 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.

First Published on Jun 27, 2020 11:44 am