Karur Vysya Bank (KVB) is one of the oldest private sector banks with strong presence in
the Southern parts of India. More than 53% of KVB’s 706 branches are located in
Tamil Nadu, however it is gradually branching out in other parts of India also. KVB’s earnings were impacted due to higher provisions
and lower business growth, however, we expect gradual recovery on both the
fronts going ahead. While in FY2018 we expect earnings recovery to be visible,
sharp growth is expected in FY2019. At the CMP the stock is trading at 1.1x it’s
FY2019 BV. We have valued the stock at 1.4x its FY2019E BV and recommend
BUY with a Target Price of Rs140 over the next 12 months.
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