Majority of Public and Private-sector Banks have published their Q4FY24 results, and various Brokerages, on the basis of the total income levels, NPAs, and interest margins, have provided various share price targets.
Listed below is one such Private-sector Bank stock under Rs 50 in which a Domestic Brokerage gave a ‘Buy’ call with a potential upside of more than 40 percent:
South Indian Bank Limited
With a market capitalization of Rs 7,248.73 crores, the stocks of South Indian Bank Limited, a Private-sector bank based in India, started their trading session on Wednesday at Rs 27.57 and closed the session at Rs 27.71, a flat movement compared to the previous closing levels of Rs 27.69 apiece.
Anand Rathi, one of the well-known Brokerages based in India, has given a ‘Buy’ recommendation on the stocks of South Indian Bank Limited and gave a target price of Rs 39 indicating a potential upside of around 40 percent compared to the prevailing share price level.
The investment rationale for providing such a recommendation pertains to improving asset quality across segments and lower provisions aiding the Bank’s core profitability, viz, its return on assets, etc.
Digging into the recent quarterly financials, the Bank’s prime business parameters, viz, its total income as well as net profit numbers, showed movements in opposing directions.
The former, on one end, increased from Rs 2,184 crores during Q3FY24 to Rs 2,275 crores during Q4FY24, and the latter, on the other end, dipped from Rs 305 crores to Rs 288 crores.
Coming onto the Bank-specific metrics, the net non-performing assets (NPAs) have consistently reduced in the past couple of years with the most recent movement being a fall from 1.61 percent during FY23 to 1.46 percent during FY24.
In addition, the net interest margin (NIM) marginally increased from 2.79 percent to 2.83 percent keeping the time horizon the same. According to the latest presentations, the Bank reported a well-diversified loan portfolio with 40 percent corporate loans, 22 percent personal loans, and the remaining comprising of agriculture and business loans.
Incorporated in 1929, South Indian Bank Limited provides various banking services and products in India. It operates through various business segments, some of which include Corporate/Wholesale Banking, Retail Banking, Treasury, and others.
Written by Amit Madnani
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