South Indian Bank shares zoom 159% from 52-week low; time to buy, sell or hold?

Shares of South Indian Bank Ltd have gained 134% in a year and risen 156% in a span of three years. Despite the ongoing rally, the stock is yet to scale the 52-week high of Rs 21.80 it hit on  December 12, 2022. South Indian Bank shares fell to a 52-week low of Rs 7.27 on June 20, 2022. Since then, the stock has recovered 159% from its yearly low.  

In the current session, the stock fell after rising for three days. The stock opened higher at Rs 19.10 today against the previous close of Rs 19.07 on BSE. It hit an intraday high of Rs 19.17 and an intraday low of Rs 18.65 in early deals on BSE.     

The banking stock has lost 0.43% since the beginning of this year. The share has climbed 15.27% in a month. Total 19.16 lakh shares of the firm changed hands amounting to a turnover of Rs 3.60 crore on BSE. Market cap of the firm stood at R 3928 crore on BSE.         

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In terms of technicals, the relative strength index (RSI) of the South Indian Bank stock stands at 74.4, signaling it's trading in the overbought zone. South Indian Bank shares have a beta of 0.8, indicating low volatility in a year. South Indian Bank shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.      

The stock can rise up to 22% to Rs 21, Geojit said on May 31. The market price stood at Rs 17.3. “Supported by strong growth in advances, improved asset quality, and higher margins, the bank has reported sharp growth in earnings. PAT stood at a record high of Rs.334cr. Asset quality improved with GNPA/NNPA at 5.14%/1.86%. However, the new book, which constitutes 58%, has shown very low slippages, providing confidence in further improvement. Hence, we upgrade our rating to BUY with a target price of Rs 21.0 based on 0.6x FY25E Adj P/BV,” said Geojit.  

Gaurav Bissa, VP, InCred Equities said, "South Indian Bank has witnessed a strong breakout from the symmetrical triangle pattern on daily charts with strong volumes. The stock is witnessing strong follow up volumes as well implying the breakout can result in a strong upside in the coming weeks. The stock has given breakout on RSI as well along with bullish MACD crossover, both of which support the postulate of a robust upmove in a short while. The stock has also triggered buy signal on ichimoku studies suggesting the stock may be starting a fresh uptrend. The stock can test Rs 23-25 levels in some time with strong support seen at Rs 17 level." 

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Sonam Srivastava, Founder at Wright Research, investment advisory firm said, "Over the past month, the stock has experienced a growth of 14%, and it has seen a significant increase of 30% from its lowest point in March. The bank possesses a favourable valuation score and maintains strong financial health. Its earnings are expected to grow at a rate of 14.26% per year, building upon an impressive growth of 1630.3% over the past year. South Indian Bank has outperformed both the Indian Banks industry and the Indian Market in terms of returns over the past year. Analysts suggest target prices that show an upside potential ranging from 13.43% to 22%. However, in the event of a reversal in the trend, the stock price could decline to Rs 15 or Rs 13.75. We regard South Indian Bank as a promising momentum stock within the banking industry, showcasing consistent progress. Interestingly, South Indian Bank also forms a part of our momentum portfolio." 

In a related development, the lender on May 31 finalised the candidates for the post of MD and CEO. The bank will submit the application to the RBI seeking approval for the same.  

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One Ltd said, "South Indian Bank has witnessed a huge spurt in price-volume in the last couple of trading sessions and surged nearly 12 percent in last week. On the technical front, the stock is placed at the crucial hurdle of the Rs 19-19.50 zone, and sustainable buying could only lead to a further northward journey toward the Rs 21-22 zone. On the flip side, the immediate support is placed around Rs 18.20-18, followed by the bullish gap of Rs 17.50-16.90." 

On May 12, the lender reported its Q4 and annual earnings.    

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Net profit rose 23 per cent to Rs 333.9 crore (highest ever) in the March quarter against Rs 272 crore in the corresponding quarter last year. Net interest income climbed 43.4 per cent on-year to Rs 857.2 crore against Rs 597.7 crore in the corresponding quarter last year. Provisions and contingencies fell to Rs 38.99 crore in Q4FY23 against Rs 77.71 crore in Q4FY22 and Rs 41.43 crore in Q3FY23. The board recommended a dividend of Rs 0.30 per equity share with a face value of Re 1 each for the year ended on March 31, 2023.    

Gross NPAs came at 5.14% and net NPAs stood at 1.86% for the March 2023 quarter --- compared to 5.90% and 2.97% in the same period a year ago.   

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