South Indian Bank shares crack 11% in two days, face resistance near Rs 24 level; is the upside capped?

Shares of South Indian Bank Ltd extended their fall for the second straight session on Friday. The stock cracked 6.84 per cent today to hit a day low of Rs 20.29 over its previous close of Rs 21.78. At today's low price, the scrip has declined 10.89 per cent in two consecutive sessions. The counter has lost 14.35 per cent from its 52-week high price of Rs 23.69, hit on July 13, 2023. The said, it has given multibagger return by rallying 160.46 per cent from its one-year low price of Rs 7.79, a level seen on August 12, last year.

On the earnings front, the lender reported a net profit of Rs 202.35 core in the June 2023 quarter (Q1 FY24), registering a growth of 75.42 per cent compared to Rs 115.35 crore in the year-ago period. Operating profit for the quarter increased by 54.74 per cent from Rs 316.82 crore in Q1 FY23 to Rs 490.24 crore in Q1 FY24.

Gross non-performing asset (GNPA) came down by 74 basis points (bps) from 5.87 per cent to 5.13 per cent on a year-on-year (YoY) basis. Net non-performing asset (NNPA) dropped by 102 bps from 2.87 per cent to 1.85 per cent, YoY.

The bank's net interest income went up from Rs 603.38 crore to Rs 807.77 crore, registering a YoY growth of 33.87 per cent. Net interest margin improved by 60 bps from 2.74 per cent to 3.34 per cent, YoY.

Analysts largely said that the counter faces resistance near its 52-week high level (Rs 23.69). A decisive breach above Rs 23.70 would be required for any fresh upward movement, one of them said. Support on the counter could be seen at Rs 20.80, followed by Rs 20.40.

Vaishali Parekh, Vice-President - Technical Research at 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 may 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."

AR Ramachandran from Tips2trades said, "South Indian Bank stock looks bearish on the daily charts with strong resistance at Rs 23.60. A daily close below the support of Rs 20.80 could lead to a target of Rs 17.80 in the near term."

Kush Ghodasara, CMT, said, "South Indian Bank is looking bearish. The stock has been trading below short-term moving averages at Rs 21.80. Keep a stop loss placed at Rs 22.50."

The stock was last seen trading higher than the 20-day, 50-, 100- and 200-day moving averages but lower than the 5-day moving averages. The counter's 14-day relative strength index (RSI) came at 53.88. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 5.29 against a price-to-book (P/B) value of 0.68.

The scrip has an average target price of Rs 22, Trendlyne data showed, suggesting a potential upside of 5 per cent. It has a one-year beta of 0.76, indicating low volatility on the counter.

Meanwhile, Indian equity benchmarks halted their six-day winning run and fell sharply today, dragged by technology and consumer stocks.

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