Karur Vysya Bank Ltd. | Q3FY15 Concall Update | Better operating performance, Asset quality pain remains. maintain BUY with upwards revised target price of Rs 672. :: IndiaNivesh

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Karur Vysya Bank - NIMs Expand, Stress At Elevated Levels; Result Update Q3FY15:: Edelweiss

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Karur Vysya Bank: Buy :: Business Line

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Karur Vysya Bank Ltd. | Transition phase behind, poised for growth. | CMP : Rs.553 | Rating : BUY | Target : Rs.633 : IndiaNivesh

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Karur Vysya Bank Ltd.|Visit Note | Outlook remains positive. maintain buy with target price of Rs 620.:: IndiaNivesh

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Karur Vysya Bank - Asset Quality Stable, Core Earnings Muted; Result Update Q2FY15 :: Edelweiss, PDF link

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Karur Vysya Bank Ltd.|Q2FY15 First Cut Analysis | Inline with expectations… maintain buy with target price of Rs 620…. :: IndiaNivesh

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Kotak reports from 18 Sep :: Kotak Sec, PDF report link

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Company
Karur Vysya Bank: Steady improvement
` We maintain BUY as the bank is addressing critical headwinds
` Tier-1 ratio improves; leverage ratio comfortable but high versus peers
` Greater focus on costs, revenue growth offer comfort


Sector
Metals & Mining: Complexities of the coal conundrum
` Captive blocks - expected step-up improvement may be delayed
` Few fallback options - little headroom for CIL, imports technology, cost
prohibitive
` Jindal Steel and Power most impacted, Coal India the only potential
beneficiary


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Technicals - Cipla, Arvind, Hindalco, Karur Vysya Bank, IOC:: Business Line

Technicals: Astrazenca pharma, MRF, Pidilite, Karur Vysya Bank, PNB, Bank of Baroda:: Business Line

Losing momentum Karur Vysya Bank:: Ambit

Losing momentum
Karur Vysya Bank’s (KVB) RoAs have declined to 1.3% in FY13 from an
average of 1.6% over FY06-11, due to constraints on its liability side,
rising cost ratios and increasing credit costs. KVB continues to seek
growth amidst a slowing macro-economic environment. We believe
unabated pressure on margins, cost ratios and asset quality would
lead to a further decline in RoAs. The stock is trading at inexpensive
valuations of 1.0x FY14 BV but near-term positive catalysts are scarce.
We initiate coverage with a SELL stance.
Competitive position: MODERATE Changes to this position: STABLE
Losing momentum: KVB delivered average RoAs of 1.6% along with asset
CAGR of 26% in FY06-11. However, its RoAs have moderated to 1.3% in
FY13, owing to: (1) continued weakness in its liability franchise (CASA to
borrowed funds declined from 23% in FY11 to 17% in FY13), (2) increase in
the cost-to-income ratio (from 42% in FY11 to 47% in FY13), and (3) rising
credit costs (from 13bps in FY11 to 53bps in FY13).
RoA moderation to continue: RoAs would decline by 30bps to 1% over the
next two years, owing to: (i) continued geographical concentration of
branches, which means that the CASA ratio would remain weak and put
pressure on margins amidst the phase of tight liquidity; (ii) the management’s
continued branch expansion plans, which would put pressure on cost ratios, as
productivity of the new branches would remain limited in the weak economic
environment; and (iii) credit costs that have been rising from the trough levels
(average 13bps in FY08-12 to 53bps in FY13) would remain elevated given
the 69% loan exposure to the corporate and commercial segments. A
significant chunk of these loans are towards the mid-corporate and consortium
loan corporate segments. KVB’s delinquency levels have increased in recent
quarters owing to this exposure.
Initiate with SELL stance and a target price of Rs320: We initiate
coverage with a SELL stance and a valuation of Rs320 (implied FY14E P/ABV of
1.0x and FY14 P/E of 6.3x) based on the EVA approach. Our EVA model
assumes sustainable steady-state RoEs of 15% beyond the next three years
and a cost of equity of 15%. The rise in credit cost will be the main driver of
RoA moderation but the geographically concentrated nature of the rapid
branch expansion will affect the operating performance of the bank as well.
Key risks to our SELL stance are a better-than-expected economic recovery,
particularly in Tamil Nadu, and a reversal in its current strategy of pursuing
rapid growth in favour of productivity improvement.

Karur Vysya Bank - TP: ` 590 Buy ::Dolat

KVB’s 8% YoY rise in net profit to ` 1.6bn was driven by the 19% growth in net
interest income, treasury income and tax write-back as operating expenses
and provisions rose. Overall asset quality showed improvement with QoQ fall in
gross and net NPLs and stable provisioning coverage.
Fresh NPL formations declined from ` 14.4bn in Q3 to ` 9.6bn in Q4. One
account amounting to ` 650mn contributed to the bulk of this quarter’s fresh
NPLs. The bank restructured loans of ` 3.3bn , of which ` 1.25bn pertained to
TNSEB.
As per the management, the expansion in branch network and human resource
during H2FY13 was the primary driver for the sharp rise in operating expenditure.
As branches take around 9-12 months time to break-even, a significant number
of branches opened during the past five quarters should start becoming more
productive and contribute to the overall operational performance going forward.
This should also help moderate the high cost/income ratio.
Provision on restructured loans and on investment book were the main drivers
for the sharp rise in provisions. Provisioning coverage ratio was stable at 75%.
Loan book grew by 23% YoY driven by the high growth in loan against jewellery,
agriculture and personal loan segment as the bank slowed down the growth in
the corporate loan segment. Going forward, the growth would be driven by
loans to SME, agriculture and personal loans.
We believe that the bank should be able to deliver much higher than industry
growth with stable asset quality. In our view, stable asset quality; faster
improvement in productivity, moderation in pace of expansion should aid in
maintaining the ROA, at time when NIM can see near term pressure. We remain
positive on the stock with Buy rating and target price of ` 590 (based on PBR
of 1.8x on FY14 BVPS forecast).

We recommend to BUY Karur Vyasa Bank (KVB)::Motilal oswal,

We recommend to BUY Karur Vyasa Bank (KVB) with a 12month
price target of `725 , valuing it at 2.25x P/ABV multiple on FY14
estimated book.
INVESTMENT ARGUMENTS:
Reasonable Presence:
Karur Vyasa Bank (KVB) is a 96 years old private bank headquartered
at Karur, Tamil Nadu with a network of 514 branches and 1400 ATMs
with business size of `58,000crs. Tamil Nadu/AP/Maharashtra has
45%/17%/13% of its branch network. KVB's 58% of the branches
are located in rural and semi-urban areas. Corporate advances/
Commercial/Agriculture contribute 42%/ 34%/15% of total loan
book.
Robust business growth:
KVB's loan book grew at 35% during FY12. KVB's deposit and loan
book grew at CAGR of 28% during the last 5 years ending FY12 v/s
18% and 19% respectively for the industry. We expect the bank to
deliver NII & PAT CAGR of 22% and 19% respectively during FY12-
14. Business growth is likely to remain strong for KVB as
management has guided for increasing branches to 700 from 514
by FY16. Asset quality is very good with restructured loans and net
NPA as % to loan book standing at 2.7% and 0.33% respectively.
Future Plans to aid profitable growth:
KVB has drawn up a road map to increase its business 2x from
`58000Cr currently to `125000Cr in FY16 by focussing on (a)
Significant Improvement in CASA ratio (b) Thrust on management
of stressed portfolio along with recovery of NPAs (c) Improvement
in fee based income by launching new products (d) Increase pan
India branch presence.
Valuation and View
KVB trades at 2x/1.7x FY13E/14E P/ABV, which is at discount of ~
10% to other listed in Private Banks (ex-Hdfc Bank). KVB has
consistently maintained payout of ~30% , which results in dividend
yield of ~3%, which is the highest amongst all private sector banks.
We believe, discount to Private Banks will vanish owing to a very
consistent performance, high dividend yield and better than
industry growth rates. New capital raising seems to be away by
more than 18 months. We recommend BUY with 12 month target
price of `725 (P/ABV 2.25x FY14E, P/E 11x FY14E).

Technicals: Alok Ind, Hexaware, Cipla, NTPC, Jaiprakash Associates, Lakshmi Vilas Bank, Karur Vysya Bank :: Business Line

Asset quality improves KVB: :: Centrum

Asset quality improves
KVB’s Q2FY13 bottomline performance came in slightly below expectation
(PAT at Rs1.3bn, up 17% YoY) though net total income was in line. A healthy
25bps NIM expansion QoQ and ~30bps improvement in %GNPA surprised us
positively. Overall asset quality remains robust with slippages at ~1.0% and
PCR healthy at ~75%. The restructured portfolio increased by 9% QoQ though
it remains comfortable at 2.8%. We maintain our positive stance on the stock
and our Buy recommendation with a revised target price of Rs550 (1.75x
FY14E).
NIM expands 25bps QoQ: NII grew by a strong 32% YoY to Rs2.9bn led by a
smart 25bps expansion in NIM coupled with healthy credit growth (27% YoY).
The NIM expansion can be traced to 25bps improvement in cost of deposits.
We expect the NIM to stabilise at current levels for H2FY13.
GNPA improves sequentially: Asset quality matrices continued to remain
healthy with 1) GNPA improving by ~30 bps QoQ 2) PCR stable at 75% 3) and
slippage rate contained at ~1.0%. Meanwhile, the restructured portfolio was
up 9% sequentially though remaining comfortable at 2.8% of loans. KVB
upgraded a textile exposure (Rs500mn exposure, had slipped in previous
quarter) after restructuring it under CDR. This helped the bank write back the
provisions created on the account. The management has stepped up
monitoring and recovery efforts lately given the challenging economic
environment.

KARUR VYSYA BANK:: Diwali Picks - November 2012 ::Anand Rathi Top 7 - Diwali Picks

Company Introduction: Karur Vysya Bank(KVB) Limited provides banking and financial services in India. KVB was started in the year 1916 in Karur. KVB has made profits consistently for the past 95 years of its banking operations. It has also declared uninterrupted divided since its operation.
Investment Arguments: KVB is planning to introduce 100 new branches and 400 ATMs during the current fiscal across the country. It aims to reach 540 branches pan-India by March 2013, which will be in line with the long-term goal of achieving a total business of Rs 1, 25,000 crore by 2016. KVB continues to register higher business growth (25%) than the system. At 27.2%, advances grew faster than deposits (23.3%).We expect the bank to continue to register a healthy ~26% CAGR over FY12-15, led by SME and retail loans.
Expected Value: 574 Sector: Banking
Both in terms of ROA & ROE, KVB has been most consistent player in last 10 years which shows quality of management. In last 10 years we find that it is consistently generating ROA of above 1 & ROE of over 20% (Average). KVB 10 years average ROA is 1.64% which is higher than HDFC which is another best bank, consistently generating higher ROA (average 1.46%) over 10 years period. Gross NPAs decreased 14.4% qoq, with fresh slippages of `613m (1.0% of loans). NPA coverage remained stable at +75%. In 2QFY13, restructured book grew 9.2%qoq to `7.1bn (2.8% of loans). We expect the 75% NPA coverage to be sustained over FY13-15, led by likely stable asset quality and 28.2% CAGR in pre-provisioning profits over the same period.
Valuation
At the current price of Rs. 390, the stock trades at a PABV of 1.20 xs for FY15e and 1.42x for FY14e. Our target price of Rs. 574 is based on target P/ABV of 1.45 for FY 15 ABV.

Karur Vysya Bank:: Reassuring Performance In Q2::Karvy,

Reassuring Performance
In Q2FY13, Karur Vysya Bank’s (KVB) PAT was in‐line with our estimate,
growing at 17.2% YoY (down 9% QoQ) to Rs1.3 bn. Pre provision profits
grew 23% YoY to Rs1.9 bn (down 4% QoQ). The bank’s asset quality
continued to demonstrate strength as gross NPA and net NPA declined
14.4% and 13% sequentially. NIM improved 24 bps QoQ to 3.06% as yields
improved and cost of deposit declined sequentially.

Karur Vysya Bank: Buy :: Business Line

Karur Vysya Bank (TP : ` 512, Buy) 􀁹:Dolat Capital, top pick

Karur Vysya Bank (TP : ` 512, Buy)
􀁹 Karur Vysya Bank’s better understanding of clienteles’ business domain and widespread
regional presence are the key strengths. Continued robust credit book expansion and
contained delinquencies have been key outcomes of the bank’s strengths
􀁹 We expect the bank’s credit book to expand e e pec e ba s c ed boo o e pa d by 28% cagr in FY12-14 much higher than the
industry. Key focus area would be retail trade, SME and agriculture sectors
􀁹 In Q1 FY13, KVB’s margin drifted by 22bps QoQ to 2.82% on higher cost of funds, however
going forward, moderation in deposit growth and increase in credit-deposit ratio would protect
erosion in margin. Though, the decline in CASA share remain our near term concern. We
factor margin to drift by 26bps to 2.62% (on yearly average basis), as a conservative stance
􀁹 We expect GNPA to hold in the current level even as the marginal pressure on asset quality
would be mitigated by higher recoveries and upgradations
􀁹 At current price, the stock quotes at 1.4x and 1.3x adjusted book value (ABV) FY13 and FY14
respectively. Based on our price target of ` 512, the stock will trade at 1.8x and 1.6x ABV
FY13 and FY14 respectively

Karur Vysya Bank- Target Price: ` 512 Buy ::Dolat

In FY12, Karur Vysya Bank (KVB) reported healthy performance even in
on-going turbulent times on the back of healthy margin of 2.9% and robust
growth in fee income. Followings are key observations in KVB’s annual
report
􀁺 KVB’s management key focus area in FY13: The bank’s management
indicated that the major thrust areas for FY13 would be improvement in CASA
ratio, improvement in asset quality and recoveries of NPAs, further broadening
of fee income and increasing footprints to have a better pan India coverage