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ICICI Securities Report
Karur Vysya Bank Ltd. has reported yet another strong quarter with higher-than-expected Q4 FY24 profit after tax of Rs 4.56 billion, driven by better-than-expected core net interest margin and strong other income, while asset quality remained comfortable. Reported Q4 FY24 return on asset was at multi-year high of 1.76%, driving FY24 RoA to 1.63%.
Due to re-classification of security receipts provisioning (Rs 1.57 billion), there is an optical rise in both other income and provisioning without any P&L impact.
We highlight that Karur Vysya Bank has amongst the lowest cost of deposits as well as lowest net non performing assset versus peers. It also scores well on consistency, profitable growth and quality of earnings. We revise our target price to Rs 240 (Rs 225 earlier), valuing the stock at ~1.5 times (~1.4 times earlier) FY26E adjusted book value.
Maintain Buy.
Within smaller private banks, Karur Vysya Bank ranks amongst the highest on FY25/26E RoA/RoE.
Key risks:
Higher-than-expected rise in opex and slower-than-expected deposits growth affecting profitability.
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