South Indian Bank shares zoom 159% from 52-week low; time to buy, sell or hold?

Shares of South Indian Bank Ltd are in focus today after the lender reported a strong set of earnings for the June 2023 quarter. The shares of South Indian Bank are already up 179% from their 52-week low of Rs 7.79 hit on August 12 last year. They have gained 176% in a year and risen 189% in a span of three years. In the last session, the banking stock almost touched its 52-week high of Rs 23.69 reached on July 13, 2023. The stock hit an intraday high of Rs 23.60, rising 3.64% against the previous close of Rs 22.77 on BSE.

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However, it saw profit-booking, slumping 12% from the intraday high to Rs 20.78 after the Q1 earnings were announced during market hours on July 20. Later, the stock ended 4.35% lower at Rs 21.78 on BSE. Earlier, the stock opened higher at Rs 22.86 on BSE. 

Total 80.65 lakh shares of the firm changed hands amounting to a high turnover of Rs 18.41 crore on BSE. Market cap of the bank fell to Rs 4,557.99 crore on BSE.  

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In terms of technicals, the relative strength index (RSI) of the South Indian Bank stock stands at 61.3, signaling it's trading neither in the overbought nor in the oversold zone. South Indian Bank shares have a beta of 0.8, indicating low volatility in a year. South Indian Bank shares are trading higher than the 20 day, 50 day, 100 day and 200 day but lower than the 5 day and 10 day moving averages.       

Aditya Gaggar, Director of Progressive Shares said, "From the lows of Rs 7 in June 2022, the stock has witnessed a steep rally of almost 200% and registered a high of Rs 21.80 in December 2022. Post the sideways movement, recently, a fresh breakout from the Flag and Pole pattern was observed in the stock. After the Q1 results, the stock reversed from the high of Rs 23.70 and formed a Bearish Engulfing pattern in the weekly timeframe with a bearish divergence in RSI. However, this kind of correction offers a good opportunity to enter and one can buy the stock at the current market price of Rs 20.60 or on decline up to Rs19.55 for a target of Rs 28.50."

Abhijeet from Tips2Trades said, "South Indian Bank stock looks bearish on the daily charts with strong resistance at 23.6. A daily close below the support of 20.8 could lead to a target of Rs 17.8 in the near term." 

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Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, “The stock has moved on quite significantly after it confirmed a breakout above Rs 21.70 zone to touch the peak zone of Rs 23.70 where it has witnessed some resistance on twice occasions and slipped down to some extent with profit booking seen. The near-term support would be seen at around Rs 20.40 levels where it can consolidate and finds support to regain strength. A decisive breach above Rs 23.70 can confirm the breakout to trigger for fresh upward movement for next targets of Rs 25-28 levels in the shorter to medium term time frame.” 

On July 20, the lender reported its Q1 earnings during last 30 minutes of trade.     

Net profit rose 75.4 per cent to Rs 202.3 crore in the June 2023 quarter against Rs 115 crore in the corresponding quarter last year.  

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Gross non-performing assets (GNPAs) fell by 74 bps from 5.87% to 5.13% on a Y-o-Y basis. Net non-performing assets slipped by 102 bps from 2.87% to 1.85% on Y-o-Y basis. Net interest income rose 33.87% to Rs 807.77 crore in the June 2023 quarter against Rs 603.38 crore in the June 2022 quarter.  

Operating profit in Q1 rose 54.74% to Rs 490.24 cr from Rs 316.82 crore in the June quarter of the previous fiscal.  

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