CSB Bank Q2 Results Review - Margins Settle At Lower Levels: Dolat Capital

Dolat Capital Report

CSB Bank reported in-line operating metrics with lower net interest margin at 4.3% offset by improved opex and higher fee lines. Asset quality metrics were steady with slippages at 1% and RoA at 1.5% remained within the guided range.

The inability to raise asset side yields coupled with continued rise in cost of fund (+17 bps QoQ) resulted in stable NIM QoQ (-6 bps).

Management lowered NIM guidance to 4.3-4.5% (4.5-4.8% earlier) but maintained RoA of 1.5-1.8% with credit costs at ~30 bps in the near term. We build in ~25 bps lower NIM versus earlier over FY25-26E, partly offset by higher fee assumptions and improved opex assumptions.

We downward revise FY25/26E earnings by 6-8% and maintain ‘Buy’ rating with a revised target price of Rs 400 (from Rs 420 earlier), valuing the bank at 1.4 times Sep-26E price/adjusted book value against RoA/RoE of 1.6%/15%. With a largely secured book (half of which is gold), CSB remains a safer bet amidst a normalising credit environment.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.