Target: ₹61
CMP: ₹44.62
South Indian Bank delivered a healthy performance for another quarter, with continued improvement in growth, profitability and asset quality. Credit growth accelerated to 18.6 per cent y-o-y in Q1FY27 (compared to 15.8 per cent in Q4FY26), led by strong traction in RAM segment, while improving CASA mix lifted the CASA ratio to 33 per cent.
NIM witnessed a sharp sequential expansion by 28 bps to 3.23 per cent, driven by lower funding costs. Looking ahead, margin are expected to remain broadly stable, as an improving retail/MSME mix offsets the pricing pressure. Despite lower treasury income, profitability remained healthy, with RoA sustaining above 1 per cent for the ninth consecutive quarter, supported by steady operating performance and moderate credit cost. Asset quality continued to remain healthy, with gross slippages moderating to 52bps. Steady moderation in slippages and healthy recoveries underscore the resilience of the bank’s loan book. Notably, we do not expect any material impact on the bank’s book due to transition to ECL. We expect the bank to sustain mid-teen loan growth and deliver RoA/RoE of about 1.1/13 per cent over FY27-28e.
We maintain Buy rating on the stock with a 12-month TP of ₹61, valuing it at 1.1x FY28e P/ABV.
Key Risks: Higher stress in corporate book; lower recoveries and lower-than-expected loan growth.
Published on July 17, 2026
