Emkay Global Financial is bearish on Karur Vysya Bank has recommended sell rating on the stock with a target price of Rs 29 in its research report dated August 01, 2020.
Emkay Global Financial's report on Karur Vysya Bank
Despite subdued growth and depressed margins, KVB reported a PAT of Rs1.05bn (est. Rs658mn), driven by high treasury gains and low opex. Lower Covid-19-related contingent provisions of Rs730mn, with cumulative provisions at Rs1.2bn (0.3% of loans), look disappointing. The moratorium rate stood at 41% as of July’20 vs. 52% in March’20, led by commercial (55%), corporate (44%) and retail book (34%). TL constitutes 48% of the moratorium book and has 34% of customers (in value terms), who have not paid any EMIs. KVB has raised LLP guidance to 2-2.5% from 1-1.5%. The bank has appointed Ramesh Babu Boddu (ex-SBI) as new MD for the next three years after the early exit of P Sheshadri. New MD will unveil his business strategy in Q2 results call, which will be keenly watched out for.
Outlook
We maintain Sell (no weight in EAP) with a TP of Rs29 (based on 0.4x FY22E ABV) amid concerns over its asset quality, especially its exposure to the SME book, and subdued return ratios.
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.
Read More