South Indian Bank - Core performance remain weak; Asset quality improves - Emkay

Reco: HOLD
CMP: Rs 21
Target Price: Rs 23

- SIB's Q3FY14 operating results below estimates with NII/ OP* at Rs3.5bn/ Rs2.2bn. Aided by provision write back on NPA/investments, PAT at Rs1.4bn was inline with estimates

- With just Rs1.0bn of slippages and Rs1.6bn of recovery/ upgrade, GNPA declined by 10%qoq. With lower provisioning, PCR** continued to remain lower at 29.3%

- Falling share of gold loan book (19.3% from 25% in Q4FY12), higher cost/ income ratio, lower CASA share, and lower PCR may put pressure on NIM's and credit cost

- With valuations at 1.0x/ 0.8x FY14/15E ABV, we do not see much downside in the stock price. Maintain HOLD rating with price target of Rs23

Source : Equity Bulls

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