Target: ₹270
CMP: ₹206.20
Emkay Global Research team met Karur Vysya Bank’s MD and CEO B Ramesh Babu, to seek the outlook on credit growth and, most importantly, on impact of US tariffs on the SME sector.
Key takeaways: KVB posted healthy gross credit growth of about 15 per cent y-o-y/6 per cent q-o-q, mainly led by strong traction in retail (20 per cent y-o-y) and SME (19 per cent y-o-y). KVB’s corporate book inched up 6 per cent q-o-q in Q1 after multiple quarters of decline, though the bank would continue focusing on a risk calibrated growth approach.
Within retail, high-yielding gold loans/LAP remain key growth drivers, together contributing 52 per cent of retail loans. KVB attempted to diversify its retail portfolio by venturing into MFI and BNPL (in a tie-up with Amazon), but has limited exposure, as credit risk has built up in both segments. Ahead, KVB expects to sustain credit growth at 2-3 per cent above the system’s in FY26E, while maintaining firm focus on balancing asset quality and profitability.
We finetune our estimates by 1-2 per cent for FY26-28, building in some moderation in growth and margin, though we expect KVB to deliver RoA/RoE of 1.5-1.7 per cent/15-17 per cent over the same period. We believe the recent stock-price correction offers a good entry point, with the stock trading at 1.2x Sep-27E ABV.
We retain Buy with TP of ₹270 (pre-bonus TP: ₹325) based on 1.5x Sep-27E ABV.
Published on September 5, 2025