KARURVYSYA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.5

📊 Core Financials & Profitability

Profit Growth: Quarterly PAT rose from ₹513 Cr to ₹521 Cr — a healthy 13.7% increase. EPS of ₹20.8 is strong for a ₹219 stock.

Return Metrics

ROE: 17.6% — excellent, indicating strong shareholder value creation.

ROCE: 7.38% — modest, typical for banks due to capital structure.

Debt Profile: Debt-to-equity at 8.66 — expected for a bank, reflecting its lending-heavy model.

Dividend Yield: 0.99% — decent, with consistent payouts.

💸 Valuation Indicators

Metric Value Insight

P/E Ratio 10.6 Undervalued vs. industry PE of 12.6.

P/B Ratio ~1.78 Fairly priced relative to book value ₹123.

PEG Ratio 0.25 Very attractive — strong growth at a low valuation.

🔍 Conclusion: Karur Vysya Bank is trading at a discount to intrinsic value. PEG and P/E ratios suggest strong upside potential.

🏦 Business Model & Competitive Edge

Core Operations: A well-established private sector bank with a strong presence in South India, offering retail, corporate, and SME banking.

Strategic Strengths

High RoA of ~2.3% in FY25, aided by recovery from technical written-off (RTWO) assets

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RTWO contribution (~57 bps) is significantly higher than peers, and expected to remain a recurring earnings driver

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Aggressive write-off policy and secured asset pool differentiate it from competitors

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Growth Outlook

ICICI Securities maintains a BUY rating with a revised target price of ₹267 post bonus adjustment

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Strong branch network (891 branches, 2,226 ATMs) and total business of ₹1.96 lakh Cr as of June 2025

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📉 Technicals & Entry Zone

RSI: 60.2 — slightly bullish, but not overheated.

MACD: −0.62 — mild bearish signal.

DMA Levels: Price above both 50-DMA and 200-DMA — medium-term strength.

📌 Suggested Entry Zone: ₹205–₹215 — near 50-DMA, offering a better margin of safety.

🕰️ Long-Term Holding Guidance

Hold if Invested: Strong fundamentals, improving asset quality, and undervaluation support long-term value.

Buy on Dips: Especially if price nears ₹205 or RSI dips below 55.

Monitor: RTWO recovery trends, NPA disclosures, and credit growth.

You can explore ICICI Securities’ full research note or Business Today’s coverage of the bank’s bonus-adjusted upside for deeper insights. Let me know if you'd like a peer comparison with City Union Bank or Federal Bank next.

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