Karur Vysya Stock Research 2018

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Karur Vysya Overview

Karur Vysya is a Private Sector bank. It has head quarters in Karur. Karur is located in Tamilnadu state. The karur Vysya Bank Limited is also known as KVB.

As per the bank website Financial landmarks of the bank as on 31.03.2018:

  • Total business of the bank was at Rs. 102863 cr. with total deposits at Rs. 56890 cr and total advances at Rs. 45973 cr.
  • The Net Profit for FY17-18 was Rs. 346 cr.
  • The net owned funds of the bank are Rs. 6211.71 cr.
  • The capital adequacy ratio of the Bank stood at 14.43% (Basel III) which is well above the regulatory requirement of 9%.
  • The Net NPA was at 4.16%.
  • The bank has been earning profits since inception and has been declaring dividend uninterruptedly.
  • The bank has declared 100% or more dividends since 2003-04. Between 2007-08 and 2010-11, the dividend was 120%. While for 2011-12, 2012-13 and 2015-16, dividend was 140%, 130% dividend was declared for 2013-14, 2014-15 and 2016-17.

The NPA of the bank is on rise. This is one concern for the bank. If you see the NPA in year 2017-18 is 4.16% whereas previous year it was 2.53%. So it is on rise significantly. NPA has become very problematic for every bank not only Karur Vysya.

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Lets us now see how the bank has performed for investors over the period of time. With increase in NPA in recent years does the bank performed better to it lost the track.

Karur Vysya Stock Performance

Below graph shows the price performance of the bank over the period of time. We have taken long time period to eliminate any seasonal increase of decrease in price.

Karur Vysya Share Price Performance 2018
Karur Vysya Share Price Performance 2018

The bank was trading at 1.5 during year 2002. Now it is trading at 80 odd levels with high of 135. So bank has given exceptional returns to its share holders over long run.

From year 2002 to 2008 it has given significant return and in 2008 market crash it did slump. Most of the financial stocks were hit badly in that time. So it is not a surprise. But after that slump period the stock again performed with occasional decline in prices often.

The bank also pays good dividend over the years. The dividend along with price increase have added to investor wealth over the years.

Karur Vysya bank My Opinion

Karur Vysya is an excellent bank based on the performance it showed over the years. But the steep increase in Non Performing Assets is an area of concern for the bank.

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If the NPA is not monitored then the bank will not be able to give positive returns in near future. It is also present in portfolio of Rakesh Jhunjhunwala.

You should also explore portfolio of other top investors and see which Financial Stocks they are bullish on. Based on that study and other private sector banks you can create your stock watch list if you are interested to invest in a company.

Personally I would track the company as of now and see how the NPA story unfolds in near future. It will be interesting to know the growth and decline of NPA. That would decide the future prospect of this Bank

Conclusion

Karur Vysya is an excellent company based on the positive returns it has given to share holders. But this period is testing for most financial companies due to NPA issues.

You should monitor the company and see how NPA issue is dealt by the bank.


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