Broker's Call: KVB (Marketperformer)

| Updated on July 27, 2018 Published on July 27, 2018

Chola Securities

KVB (Marketperformer)

CMP: ₹98

Target: ₹112

During 1QFY19, KVB’s advances, showed a moderate growth of 12.9 per cent y-o-y (4.2 per cent q-o-q) to ₹47,900 crore (beating CSEC estimate of ₹46,600 crore). Growth was predominantly led by retail (24.9 per cent y-o-y), and commercial (14.6 per cent y-o-y) segments. The loan mix was noted at corporate 31 per cent, commercial 34 per cent, agriculture and retail, contributing about17 per cent each.

Valuation:. Although KVB’s asset quality remains weak, the management sounds confident of improving the same going forward. Also there are signs of improvements in liability franchise, with higher share coming from CASA owing to digitisation, which will have a positive impact on the NIMs. We maintain our target price to ₹112, assigning a P/ABV of 1.1X FY20E and rate the stock a Marketperformer.

Risks: Slower than expected loan growth, increase in slippages might impact earnings.

Published on July 27, 2018
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