Lakshmi Vilas Bank to get new promoter? What is deal amount? How does it compare with Karnataka Bank? Check report

South India-based Lakshmi Vilas Bank is likely to have a new promoter as Clix Capital has submitted a Letter of Intent (LoI) for buying a 45 per cent share, Zee Business’ Pooja Tripathi reports. The deal size is estimated to be somewhere between Rs 1400 cr and Rs 1500 cr.

Tripathi said that this was second such attempt to buy shares in the bank – a similar attempt was earlier made by Indiabulls Housing Finance Limited.

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लक्ष्मी विलास बैंक को जल्द मिलेगा नया प्रोमोटर !
कौन खरीदेगा हिस्सा और कितने करोड़ की होगी डील?
लक्ष्मी विलास और कर्नाटक बैंक में कौन है ज्यादा बेहतर?
जानने के लिए देखिए #ZBizExclusive रिसर्च#LakshmiVilasBank #KarnatakaBank @AnilSinghvi_ @poojat_0211 pic.twitter.com/9TRHwLHfo9

— Zee Business (@ZeeBusiness) June 22, 2020

In her exclusive research she brings in a comparison between Lakshmi Vilas Bank and another South Indian bank – the Karnataka Bank.   

While the former has a market capitalisation at Rs 625 cr and has been under sustained losses, the latter is better valued with a much stronger balance sheet, she said. Lakshmi Vilas Bank has been under under the PCA (Prompt Corrective Action) Framework. Market cap of Karnataka Bank is at Rs 1307 cr.

The Karnataka Bank shares are available at a P/E ratio of 3 with a P/B value of 0.22 which makes it an attractive buy in comparison to the Lakshmi Vilas Bank. RBI has also not given the NPA divergence report on Karnataka bank till now, she said. P/E for Lakshmi Vilas Bank is -0.5 while its P/B value is 0.4.

Karnataka Bank is also a much better managed bank in terms of due diligence as the bank has been very proactive on its problematic accounts, she said.

Some analyst reports even suggest that there could be a fall in the provision coverage ratio of the bank. The bank also reported a good Q4 results especially in terms of its NPAs. The new NPAs have come down during the last quarter with Gross NPA numbers standing at 4.82 per cent, down from 4.99 per cent. Net NPA have also come down to 3.08 per cent, she said. The gross and net NPAs for Lakshmi Vilas Bank stand at 21.25 per cent and 10.47 per cent respectively.

The bank has also been working on its margins and it is expected that in FY 21 they could reach at 3 per cent.

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The number of bank branches of Karnataka Bank are also higher at 712 as against 462 branches of Lakshmi Vilas Bank.