This private bank's shares have doubled investors' money in just 6 months - Should you book profit?

South Indian Bank Share Price Target 2023: South Indian Bank shares have yielded multibagger returns in the last 6 months, zooming a whopping 100 per cent return, resulting in wealth gain for its investors. Domestic brokerage firm ICICI Securities has now said that it is bullish on the private lender as its revamped business model is producing positive results. The brokerage said that it believes an improving profitability trajectory will continue for the Kerala-based bank.

ICICI Securities said that the bank reimagined its business model and adopted 6Cs strategy which focuses on capital, CASA, cost to income, competency building, customer focus and compliance. The lender has gone under the overhaul post the onboarding of Murali Ramakrishnan as new MD in September 2020.

It said that the bank's RoA (return on assets) will reach 0.80 per cent in FY24. It said that slippage ratio (the rate at which a good loan goes bad) has fallen to 2 per cent in Q3FY23 as compared to 2.9 per cent in Q1FY23, and the PCR (Put/Call ratio) has improved to 60 per cent, indicating that credit costs are expected to remain at current levels. 

South Indian Bank Share Price Target 2023

The brokerage retained its 'buy' recommendation on the stock and increased the target price to Rs 25 per share, representing a gain of more than 42 per cent from the stock's last closing price Rs 17.60. 

Nonetheless, as seen by an increase in their proportion from 75 per cent in September 2021 to 95 per cent in December 2022, the majority of financing to firms has been for those with AAA/AA/A ratings, the brokerage stated. 

Due to higher NIMs and reduced credit cost assumptions, ICICI Securities has increased its earnings forecasts for FY23E and FY24E by 12 per cent and 24 per cent, respectively. 

The bank's low C/D ratio of 74 per cent will help it efficiently control the growth of its deposit base. According to the brokerage, this will then allow the bank to maintain lower deposit rates until all of the extra liquidity on the balance sheet has been used up.

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