Ventura Securities has Buy on South Indian Bank Ltd. with a target price of Rs 36 .The current market price of South Indian Bank Ltd. is Rs 26.45 Time period given by analyst is Medium Term when South Indian Bank Ltd. price can reach defined target.
Investment Rationale by Ventura Securities
With most of the provisioning of the stressed assets behind us and South Indian Bank (SIB) focusing on aggressively growing its retail book, Ventura Securities expects the growth story to start unfolding. The brokerage house expects the loan book to grow at a 16 per cent CAGR to Rs 72,810 crore by FY20, driven by a 21 per cent CAGR in the retail book.
Further Ventura expects NPAs to normalise to historical levels and, as a result, earnings are expected to grow at 28.6% CAGR to Rs 834.4 crore over the same period.
The brokerage house re-initiate coverage on South Indian Bank (SIB) with a BUY recommendation and a Price Objective of Rs 36 (target Adj P/BV multiple of 1.2x).
With the board already having given approval for fund raising through equity placement (20 crore shares) to Qualified Institutional Buyers (QIB), capital adequacy will not be a constraint and should help sustain growth momentum over the forecast period FY17-20.
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