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Anand Rathi Report
South Indian Bank Ltd. came out with a strong Q3 set of figures, net interest income/pre-provision operating profit/profit after tax above our estimates due to higher treasury income and lower provisions.
Profitability improved overall with return on asset at 1.05% (up 8 basis points QoQ). Asset quality improved across segments.
With stress from the legacy book recognised, the focus now shifts to profitability.
We expect South India Bank to deliver a sustainable 1% RoA from now.
We retain our 'Buy' rating, with a 12-month target price of Rs 39, valuing the stock at 0.9 times price/adjusted book value on the FY26E book.
Risks: Higher stress arising from the corporate book; less-than-expected loan growth.
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