Karur Vysya Bank - Well Placed On LDR, Growth, Asset Quality, RoA Superiority: ICICI Securities

ICICI Securities Report

Karur Vysya Bank Ltd. has seen remarkable transformation under the current management with steady growth and superior return on asset.

The bank sports one of the lowest cost of deposits alongside superior net interest margins among peers. The bank has one of the lowest loan-to-deposit ratio (83%) and one of the highest liquidity coverage ratios (185%); thus, should sustain ~15% compound annual growth rate in loan growth through FY24– 26E.

All-inclusive SMA pool at <0.5% and amongst lowest net NPA (<0.4%) along with minimal exposure to unsecured retail nourishes our confidence on further moderation in credit costs.

Overall, we expect Karur Vysya Bank to sustain its leadership on RoA/RoE within the mid and small private banks space. Maintain Buy; target price revised to Rs 270, valuing the stock at ~1.6 times FY26E adjusted book value.

Enviable positioning on LDR, LCR, asset quality and RoA should lead to further re-rating.

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