Karur Vysya Bank: PAT growth of 45% & Total Income growth of 21% in FY24 at a PE of 9.8
Karur Vysya Bank: PAT growth of 45% & Total Income growth of 21% in FY24 at a PE of 9.8
P/B of 1.6 creates re-rating opportunities in P/B multiple. Strong outlook based on loan growth of 14%+, stable NIMs and ROA of 1-6-1.65% in FY25 for KARURVYSYA.
1. A private sector bank
kvb.co.in | NSE: KARURVYSYA
2. FY20-24: PAT CAGR of 62% & Total Income CAGR of 12%
Income growth picked up from FY23
3. Strong FY23: PAT up 64% & Total Income up 29%
4. Strong 9M-24: PAT up 50% & Total Income up 20% YoY
Profit growth supported by lower provisions.
5. Strong Q4-24: PAT up 35% & Total Income up 26% YoY
6. Strong FY24: PAT up 45% & Total Income up 21% YoY
Operating profit growth grew by 14% in FY24. This is an indicator of the PAT growth for FY25 when the impact of lower provisioning would have played out within FY24.
7. Business metrics: Strong & improving return ratios
We have achieved ROA of 1.76% in this quarter. It could be noticed that our ROA has consistently improved from 0.19% in December '20, and grown sequentially in the last 13 quarters
8. Outlook: Loan growth to be at 14%+
i. FY25: Loan growth at 14%+
Loan Growth: Overall loan growth to be at 14% plus
Net Interest Margins (NIMs): With respect to the margins, we expect that to be at and around 4% levels till first half of the current year
Gross NPA: down to 1.4%, and we expect that we will continue to maintain at below 2% levels.
Net NPA: down to 0.4%, and we would continue to maintain net NPA at less than 1% of our loan book.
ROA: We have achieved ROA of 1.63% in financial year '24. Our effort would be to ensure that our ROA is above 1.6% or 1.65% levels at all times
9. PAT growth of 45% & Total Income growth of 21% in FY24 at a PE of less than 10
10. So Wait and Watch
If I hold the stock then one may continue holding on to KARURVYSYA
Based on FY24 performance, KARURVYSYA looks on track to deliver the on the FY25 guidance of 14% loan growth.
The advances of the bank grew by 16% for the year, and it could be noticed that the bank has achieved this growth after a gap of 11 years.
KARURVYSYA is in the middle of a strong run and has delivered sequential QoQ growth in top-line & bottom line in all the quarters of FY24
The momentum of FY24 is expected to continue into FY25 on the basis of a strong guidance for FY25.
11. Join the ride
If I am looking to enter KARURVYSYA then
KARURVYSYA has delivered PAT growth of 45% and total income growth of 21% in FY24 at a PE of 9.8 which makes the valuations quite reasonable.
At a Q4-24 end net-worth of Rs 9,802.82 cr on a current market cap of Rs 15,704 cr implies that KARURVYSYA is trading a price to book of 1.6 which makes the valuations quite reasonable.
FY25 loan growth estimate of around 14% at PE of 9.8 is nothing exciting but we are looking at a re-rating based on the price to book multiple as the provisions reduce and the quality of the book improves. There will be an opportunity in the stock till a price to book of closer to 2 based on outlook for FY25.
Previous coverage of KARURVYSYA
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