Stock Review: South Indian Bank

Stock : South Indian Bank

CMP: Rs 108.5    Book Value : Rs 113.76

Industry : Banking – Private Sector

 

Creation of the Swadeshi movement in India to help the business community from the clutches of greedy moneylenders, South Indian Bank has travelled a long distance in converging itself to a next generation banking destination.

Investment Guru is of the view that South Indian Bank is a good buy from short term as well as medium to long term perspective.

• SIB has put up a good show on a consistent basis. The advances have grown from Rs 5300 Crore  to 11800 Crore in last 4 years.
• Interest Income has grown at a CAGR of 33.5% over the period of last 4 years.
• SIB has also shown consistent growth in net profits with a CAGR of 100% over last 3 years.
• The stock offers an attractive dividend yield 2.78% in addition to growth prospects which creates a good combination for investors.
• SIB commands strong brand loyalty among its NRI customers.
• With EPS of 19.14 the stock is currently quoting at a Price to Book Value of 0.95 and a PE of 5.64 which shows that the stock has a strong potential to move up based on its recent performance as compared to its peers which are quoting between PE multiples of  8 to as high as 35.
• The Q1’09 results of the bank were encouraging with bank reporting 60 Crore Net profit and quarterly EPS of 5.32. Net NPA’s fell to 0.39% as compared to 0.49% recorded in Q1’08.
• FII’s hold 36.22% stake in the company as compared to 42.7% last year. However, there is no promoter holding which is partly a reason for comparative lower valuations assigned to the bank. On the other hand, this makes it a hostile takeover target and provides investor a possibility of windfall gains if that happens.