South Indian Bank shares rebound 112% from 52-week low; how strong is the uptrend?

Shares of South Indian Bank Ltd have recovered 112% from their 52-week low in less than a year. The banking stock, which fell to a 52 week low of Rs 13.79 on March 29, 2023, hit a high of Rs 29.29 in the current session. The banking stock is trading near its record high of Rs 29.88 reached on January 16, 2024.   

South Indian Bank hitting record high assumes significance ahead of the lender’s December 2023 quarter earnings set to be announced on January 18, 2024.   

The stock hit an intraday high of Rs 29.29 on Wednesday against the previous close of Rs 29.66 on BSE. Earlier, the stock opened higher at Rs 29.18 on BSE. Total 45.24 lakh shares of the firm changed hands amounting to a turnover of Rs 13.12 crore on BSE. Market cap of the bank stood at Rs 6043.84 crore on BSE.   

At 10:20 am, South Indian Bank shares  were trading 2.60% lower at Rs 28.89 on BSE.  

South Indian Bank shares have a beta of 0.7, indicating very low volatility in a year. The stock has gained 56% in a year and risen 213% in a span of two years.   

ICICI Securities is bullish on South Indian Bank. It has a target price of Rs 31 on the banking stock.   

Also read: Stock recommendations by analysts for January 17, 2024: AB Capital, Cipla and UBL

“In the last three years, South Indian Bank has come a long way and we believe the ongoing transformation journey should re-accelerate under Mr Seshadri. Notwithstanding some pressure on near-term NIMs, we see stable FY25 YoY NIMs aided by favourable mix and low LDR. We revise our earnings estimates upwards and now see 90 bps RoA for FY25E/26E with RoE rising to 14-15%,” said the brokerage.  

Jignesh Shial, Director - Research, Head of BFSI Sector at InCred Capital said, "It has been a turnaround story with focus shifting from corporate to retail lending with focus on SME/MSME and gold loans. The previous MD had been from ICICI Bank and has cleaned up the NPAs and brought bank to granular profitability. However, he left the bank for personal reasons. The new MD is carrying the momentum, however, he needs to keep a close eye over incremental asset mix and liability profile. The bank is likely to raise money through rights issue, which will boost future growth."   

In terms of technicals, the relative strength index (RSI) of the South Indian Bank stock stands at 73.8, signaling it's trading in the overbought zone. South Indian Bank shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day and 200 day moving averages.       

The private sector lender reported a 23.2 percent rise in net profit to Rs 275 crore for the July–September 2023 quarter against Rs 223 crore in the September 2022 quarter. Net interest income (NII) climbed 14.46% to Rs 831 crore for the Q2 FY 2024 compared to Rs 726 crore on Y-o-Y basis. Net Interest Margins (Quarterly) rose 10 bps Y-o-Y to 3.31% in the September 2023 quarter against 3.21% in the September 2022 quarter.    

The lender’s gross non-performing assets (GNPA) fell to 4.96 percent of the total value in Q2 from 5.67 percent in Q2FY23. Net NPAs stood at 1.70 percent in Q2 against 2.51 percent a year ago.   

 

Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as an investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions. 

 

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