By Lithin Reddy
Published: Thursday, January 27, 2022, 12:54 PM [IST]
ICICI Direct is one of the biggest brokerage firms in India. ICICI Direct has initiated a buy call on CSB Bank, with a target price of Rs. 320, and the time period given by the brokerage when this stock can reach the given share price target is 12 months. Currently, CSB Bank is trading at Rs.244.
CSB Bank is a south-based private sector bank with Kerala contributing more than 50% of the total business. CSB Bank has given a return of just 11% in the last 1 year and a negative return of 28% in the last 6 months.
|Current Market Price (CMP)||Rs. 244|
|Target Price||Rs. 320|
|1 Year Return||28%|
Q3 FY22 results
NII reported a growth of 20.7% YoY to Rs. 303 crore on the back of 24bps QoQ expansion. In NIMs. Margins were boosted by healthy interest income recoveries. Other income was down 12.7% QoQ as treasury profits declined.
Asset quality improved sequentially as GNPA and NNPA were down 149 bps and 127 bps QoQ to 2.62% and 1.36%, respectively. Gold loan NPAs declined from Rs. 288 cr to Rs. 102 cr sequentially. slippages were at Rs. 81 cr vs Rs. 205 cr QoQ while recoveries were at Rs. 206 cr vs Rs. 190 cr QoQ. The bank currently has Rs. 105 cr provisions for likely impact due to covid.
Business growth was modest as advances were up 11.4% YoY to Rs. 14637 Cr. However, on a sequential basis, credit offtake was better at 4% wherein gold loans posted 7% QoQ growth. Deposits were up 7.3% YoY to Rs. 19056 cr and flattish QoQ. CASA deposits increased 22% YoY and 6.1% QoQ. As a result, the CASA ratio improved to 34.5% vs 32.58% in the previous quarter.
Key triggers for future price performance as per the brokerage
- Helathy recovery in glod segment to aid performance.
- Multiple levers for margin improvement.
- Credit cost to remain benign due to thus aiding profits.
- Loan growth to pick up as unlocking progresses and launch of new products.
What should investors do? as per the brokerage
CSB bank stock has given marginal returns in past one year, primarily on account of apprehensions on asset quality SME segment due to lockdowns but we believe as these overhangs fade away the stock should see a positive reflection, ICICI Direct maintains a buy rating on the stock.
The above stock was picked from the brokerage report of ICICI Direct, investing in equity poses a financial risk, before investing please consult your financial advisor, we are not liable for any losses caused as a result of decisions based on the article.