According to HDFC Securities, Karur Vysya Bank is a good stock to add to one’s portfolio with a target price of Rs 119. Currently, the market price of Karur Vysya Bank is Rs 98.65. Established in 1916, Karur Vysya Bank is a banking company with a market capitalisation of Rs 7905.38 Crore. Its key revenue segments are Interest & Discount on Advances & Bills, Income from Investment, Interest on Balances with RBI and Other Inter-Bank Funds, and Interest for the year ending 31-Mar-2022.
Financials
The company has recently reported its financial results for the quarter ended on 31st March 2023. According to the report, the company’s standalone total income for the quarter was Rs 2169.13 Crore, which marks an increase of 7.77% from the total income of the previous quarter, which stood at Rs 2012.71 Crore. In comparison to the same quarter of the previous year, the total income has shown a growth of 34.33% from Rs 1614.75 Crore.
The net profit after tax for the latest quarter was reported to be Rs 337.82 Crore.
Investment Rationale
KVB (Karur Vysya Bank) remains committed to its strategy of increasing retail deposit mobilization and improving cross-selling to boost loan growth. The bank has revamped its distribution channels to support its targeted balance sheet growth of 14% YoY in FY24. However, the brokerage is of the view that margin compression, in the range of 40-50bps, and higher operating expenses are expected to limit the bank’s return ratios.
Despite these challenges, the brokerage has revised its earnings estimates for FY23/FY24 upwards, factoring in KVB’s stronger growth and lower credit costs. The higher operating expenses have been offset by the bank’s improved performance.
Promoter/FII Holdings
As of 31st December 2022, the promoters of the company held a 2.25% stake, while foreign institutional investors (FIIs) held 17.03% and domestic institutional investors (DIIs) held 30.69%.
