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.


Unknown said...

Good Post. Thinking to pick some shares if it goes down below 100.

Unknown said...

Additional news on SIB

South Indian Bank (SIB) has successfully raised Rs.200 crore capital through issuance of Tier II bonds.

India's biggest life insurer LIC has subscribed to Rs.135 crore out of the bond issue of Rs.200 crore.

Capital Adequacy Ratio (CAR) of the bank stood at 13.89 percent as on March 31,2009 and at 13.93 percent as on June 30,2009,which is well above the RBI norm of 9 percent.

SIB is targetting to double its business in next 3 years.

Rajesh, thanks for a wonderful review. would certainly consider it for buying.

Sameer said...

Good Buy, but at lower level. I will buy if it reaches 80.

Anonymous said...

The stock is up 6% today !!!

Anonymous said...

I think it is a good stock worth putting your money.

khalid said...

Nice review of the stock would like to buy at the time of fall.

Vineet said...

ICICI Securities has put a buy recommendation on South India Bank with a target of 137.80

George said...

Is it still a buy at these levels? rs128/- or should one wait for it to dceline

Sumit Goel said...

ICICI Securities has put a buy recommendation on South India Bank with a target of 172.

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