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South Indian Bank scripts a turnaround
March 24, 2023
The stock of Thrissur-based South Indian Bank outperformed its peers in the past year. While it is a small-cap stock with market capitalisation of just ₹3,500-odd crore, the sharp rise of 118% to ₹17.2 per share (on Thursday) has attracted brokerages towards it.
In a recent report, ICICI Securities has increased its price target on the stock to Rs 25 from ₹14 due to its improved performance. Analysts attribute the stock performance to a shift in the bank’s strategy under managing director and chief executive officer Murali Ramakrishnan.
“He (Ramakrishnan) has improved the working of South Indian Bank, which is very positive for the bank. It has surprised everyone on the seat. I think the bank is still very attractive as a long-term investment bet,” Prabhakar AK, head of research, IDBI Capital Markets, said.
When Ramakrishnan took over as the top boss in September 2020, drawing from his stint at ICICI Bank, he formulated the ‘6C’ strategy with an aim to achieve ‘profitable growth through quality credit’. The strategy sought to focus on capital, CASA deposit book, cost-to-income, competency building, customer experience and compliance.
When Ramakrishnan took over as the top boss in September 2020, drawing from his stint at ICICI Bank, he formulated the ‘6C’ strategy with an aim to achieve ‘profitable growth through quality credit’. The strategy sought to focus on capital, CASA deposit book, cost-to-income, competency building, customer experience and compliance.
“We were also in the midst of COVID-19, and so we were expecting a lot more slippages to happen during the COVID period. With the capital level being low, we were in a challenging situation, wherein one side, your delinquencies will rise and you need to take more provisioning. On the other side, we had a book with huge NPAs impacting the profits,” says Ramakrishnan.
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