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Business News/ Markets / Stock Markets/  South Indian Bank share price skyrockets 11% on shortlisting candidates for new MD, CEO posts; should you buy?
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South Indian Bank share price skyrockets 11% on shortlisting candidates for new MD, CEO posts; should you buy?

South Indian Bank's stock soared by almost 11% as it prepares to submit shortlisted candidates for the appointment of new MD and CEO to the Reserve Bank of India. The move follows several key changes made in management, which have led to a target price upgrade from brokerage Geojit.

Geojit has upgraded its rating to BUY with an upward revised target price of  ₹21.0 based on 0.6x FY25E Adj P/BV.  (Aniruddha Chowdhury/Mint)Premium
Geojit has upgraded its rating to BUY with an upward revised target price of 21.0 based on 0.6x FY25E Adj P/BV. (Aniruddha Chowdhury/Mint)

Small-cap stock South Indian Bank skyrocketed by nearly 11% on Thursday as the private sector lender will soon submit the names of shortlisted candidates for the appointment of new MD and CEO to the Reserve Bank of India (RBI). The bank has made several key changes in its management. Brokerage Geojit has upgraded its target price on this Kerala-headquartered bank.

At the time of writing, South Indian Bank's stock price traded at 18.80 apiece up by 8.99% on BSE. The stock has climbed by 10.72% with an intraday high of 19.10 apiece during the day.

On Wednesday, in its regulatory filing, South Indian Bank said the board of directors has approved the panel of candidates, in the order of preference, for the position of the Managing Director & Chief Executive Officer (MD & CEO) of the Bank.

It further added, "The Bank will be submitting its application to the Reserve Bank of India with the names of the candidates in the order of preference, seeking approval for the appointment of the new MD & CEO."

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Also, the bank's board appointed Nandakumar G, General Manager as Head of Inspection and Vigilance Department and Head of Internal Audit and Chief of Internal Vigilance with effect from June 1, 2023. This comes after Joby M C retired from his posts at the bank, effective May 31, 2023.

In its research note dated May 31st, Geojit's Research Analyst Cyril Charly said, "SIB, under the new management, has been successfully realigning their balance sheet with quality lending and improved margins. The new book has seen higher yields with low slippages, taking margins higher."

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Charly's note added, "On the outset of the resignation of the current MD, successful implementation of the succession planning would be a key factor."

Further, the analyst highlighted that South Indian Bank's management expects slippages for FY24 at Rs1,500 crore with a majority of it expected from the restructured book, which currently stands at Rs.1 516 crore. Management has guided for a credit cost of 1.00-1.25% for FY24. The bank has also increased its PCR to 65.% from 57% in the previous quarter and aims to bring it to 70% by the end of FY24.

Following this, Charly said, “We expect credit growth of 14% during FY23-25E. With improved fundamentals, ROE is expected to be 13.1% by FY25. We upgrade our rating to BUY with an upward revised target price of 21.0 based on 0.6x FY25E Adj P/BV."

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Updated: 01 Jun 2023, 04:20 PM IST
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