The shares of one of the Banking stock, specialising in retail banking, corporate banking, and financial services, jumped 1 percent after Emkay Global Financial Initiates Buy Target for 40 percent Upside Potential on it.
Price action
With a market capitalization of Rs. 18,107 crores, the shares of Karur Vysya Bank Limited opened at Rs. 230 on Wednesday, up by 1 percent making a high of Rs. 230.84 per share compared to its previous closing price of Rs. 227.82 per share.
What Happened
Karur Vysya Bank Limited, specializes in retail banking, corporate banking, and financial services, including personal loans, home loans, and business banking solutions, jumped 2.8 percent after Emkay Global Financial Initiates “Buy” Target of Rs. 325 with 40 percent upside potential.
Here are the reasons for the potential “Target “
- Strong Profitability: KVB Total Business up by 14.93 percent YOY and 3.32 percent for the quarter and Deposits are up by 15.75 percent YOY and 3.46 percent for the quarter. Net profit for the nine months registered a robust growth of 24.28 percent and stood at Rs. 1,428 crore from Rs. 1,149 crore during corresponding nine months of the previous year.
- Healthy Loan Growth: The bank is growing its loans at a healthy pace of 15 percent year-on-year, which helps generate more income, even though they have slowed down growth in some high-margin areas.
- Strong Returns: KVB is expected to keep delivering good returns on assets and equity, which makes it an attractive investment.
- Improving Profit Margins: The bank has recently reduced interest rates, which should help improve its profit margins in the future.
- Stable Management: The bank has a strong leadership team and enough financial buffers to handle risks, making it a top pick among smaller private banks.
- Outlook: Emkay expects the company to maintain superior returns on assets (1.7 percent) and equity (17-18%) over the next 3 years (FY25-27). They believe the bank’s strong performance will continue, which supports their Buy recommendation.
Key Insights
Karur Vysya Bank (KVB) has a P/E ratio of 10.06, below the industry average of 17.17,. Its low PEG ratio of 0.48 also indicates stock might be undervalued and Company has achieved an Average 3 Year Net Profit growth of 33.58 percent.
Key Financials
The company’s revenue rose by 18.2 percent from Rs 2,497.17 crore to Rs 2,953.44 crore in Q3FY24-25. Meanwhile, Net profit rose from Rs 411.63 crores to Rs 411.63 crore during the same period.
Written by Sridhar J
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