Shares of Karur Vysya Bank surged nearly 3.40% to ₹100.75 apiece in early-day trade on Tuesday after the bank delivered a stellar performance for the fourth quarter of FY23 (Q4FY23). The private sector lender on Monday reported a 58.68% YoY and 17% QoQ growth in net profit to ₹338 crore for the fourth quarter ended on March 31, 2023, on better non-interest income.
Net interest income (NII), which is the difference between the interest earned from lending activities and the interest paid to depositors, came in healthy at ₹893 crore, an increase of 26% YoY. The bank's net interest margin improved to 4.37% in Q4, up 55 bps from 3.82% a year ago.
The bank's non-interest income showed a considerable increase of 96% YoY to ₹401 crore. The bank's operating profit rose to ₹739 crore from ₹441 crore in the corresponding quarter of the last fiscal year.
Total income during January–March 2022–23 rose to ₹1,294 crore, a growth of 41% YoY from ₹915 crore in the same quarter of the previous fiscal year.
On the asset quality side, the bank's gross non-performing assets (NPA) came down by 376 basis points to 2.27% in Q4FY23. Similarly, net NPA dropped by 157 basis points to 0.74%.
For the full fiscal year of 2022-2023, the bank's net profit grew 64.3% to ₹1,106 crore from ₹673 crore in 2021–22. PPOP for the period increased by 52% to ₹2,476 crore, as compared to ₹1,630 crore in FY22.
The board of the bank recommended a dividend of ₹2 per equity share, or 100 percent on the face value of ₹2 each, for the financial year ended March 31, 2023, subject to the approval of the shareholders.
The shares of the bank have been on a bullish trend, having risen by approximately 131% in the last one-year period, soaring from ₹42.10 apiece to ₹97.25. Moreover, the stock has delivered an impressive return of 310% over the last three-year period.
Brokerage firm Kotak Institutional Equities maintained a 'buy' rating on the stock with an unchanged target price of ₹125 apiece.
"KVB is providing greater confidence to investors as a stock idea, given its consistent performance on various asset quality metrics. A re-rating from current levels would need the bank to give steady and consistent growth, with no major negative surprises on costs and asset quality, which we believe is possible," said Kotak Institutional Equities.
11 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.