Karur Vysya Bank Share Price Target at Rs 413: BOB Capital Markets

Harish Dhawan 19 October 2026

BOB Capital Markets has maintained its BUY rating on Karur Vysya Bank and raised its target price to Rs 413 from Rs 362, implying about 19% upside from the Rs 346 close on Oct. 15, 2026. The Tamil Nadu lender posted gross advances growth of 20% year-on-year in the September quarter, net interest income growth of 18.7% and a 37.2% jump in net profit to Rs 788 crore. Management raised its FY27 net interest margin guidance to 4% or more and its return on assets guidance to above 2%. Asset quality held firm, with gross NPA at 0.69%. The brokerage now values the bank at 2.1 times September 2028 adjusted book value.

BUY · MAINTAINED
Q2FY27 Result Review
Private Banking

Karur Vysya Bank lifts its margin and RoA guidance as BOBCAPS raises target to Rs 413

BOB Capital Markets · Report dated Oct. 16, 2026 · Price as of Oct. 15, 2026

PLEDGE CARD · KVB
Article1 equity share
Appraised (CMP)Rs 346
Earlier sanctionRs 362
Revised sanctionRs 413
Headroom~19%
52-wk rangeRs 223–359
Basis2.1x Sep'28E ABV

The call at a glance

BOB Capital Markets, or BOBCAPS, has reiterated a BUY on Karur Vysya Bank after a robust September quarter. The revised target of Rs 413 rests on 2.1 times September 2028 estimated adjusted book value, up from 1.8 times earlier, citing stronger earnings, better guidance and stable asset quality.

Rating	CMP	Target	Upside	52-wk high/low	Market cap	Valuation basis
BUY	Rs 346	Rs 413	~19%	Rs 359 / Rs 223	~Rs 33,400 crore	2.1x Sep'28E ABV

Guidance moves up a notch

FY27 NIM

3.70–3.80%

▲ 4.00%+

FY27 RoA

1.8%

▲ 2%+

FY27 credit growth

guidance held

18–20%

Cost-to-income

next two quarters

below 45%

Margins: Reported NIM held at 4.26%, or 4.34% including an 8-basis-point one-off recovery. Yield on advances rose 8 bps sequentially to 10.09%, helped by commercial and retail loan-against-property pricing, while cost of deposits edged up 4 bps. With 57% of loans linked to the external benchmark and 7% to MCLR, BOBCAPS argues the bank can pass on a 25-bp rate hike swiftly.

Quarter in numbers

Rs crore	Q2FY26	Q1FY27	Q2FY27	YoY (%)	QoQ (%)
Net interest income	1,261	1,423	1,497	18.7	5.2
Non-interest income	512	442	435	(15.1)	(1.6)
Operating expenses	756	769	770	1.8	0.1
Pre-provision profit	1,017	1,096	1,162	14.2	6.1
Provisions	274	90	119	(56.8)	31.3
Net profit	574	756	788	37.2	4.2
NIM (%)	3.77	4.26	4.26	+49 bps	flat
Cost-to-income (%)	42.6	41.2	39.9	(278 bps)	(139 bps)

Fee income rose 14.6% year-on-year, but other income fell 44%, dragging total non-interest income lower. Operating expenses stayed flat sequentially at Rs 770 crore, as an 8% rise in core salary costs was offset by Rs 28 crore of actuarial savings after a 40-bp increase in discount rates.

Where the loan book is growing

RAM (retail, agriculture, MSME) 86%

Corp. 14%

Corporate +24% YoY / +12% QoQ
Retail +21% / +5%
Agriculture +20% / +4%
Commercial +8% QoQ

Breadth: Gross advances rose about 20% year-on-year and 7% sequentially to roughly Rs 1.11 lakh crore, while total business reached Rs 2,39,712 crore. Small and business banking disbursements surged 24% quarter-on-quarter. Corporate growth came from EPC, infrastructure, NBFCs and selective textile capex, with an average ticket size of just Rs 42 crore.

Deliberate exits: The bank has stopped fresh low-yielding vehicle loans, which carry 150% risk weights, and is avoiding home-loan price wars. Capital is being redirected to gold loans, mortgages and loan against property.

Jewel loans against the internal ceiling

0%29% of advances (Rs 32,153 crore)35% cap50%

Loan-to-value: 67% on agri gold loans, 59% on non-agri. Pricing: 10.75% agri, 14% retail.

Funding: Deposits grew 16% year-on-year to Rs 1,28,123 crore, with CASA steady at 27.5%, ahead of broader industry trends, according to BOBCAPS. Retail deposits make up 73% of term deposits.

Asset quality stays pristine

Gross slippages eased to Rs 120 crore from Rs 140 crore in Q1, taking the annualised slippage ratio to 0.44% from 0.53%.
Gross NPA fell 5 bps sequentially to 0.69%; net NPA eased to 0.18%; SMA-30+ held at 0.22% of advances.
Stressed assets declined to Rs 590 crore, or 0.4% of total assets, from Rs 670 crore a year earlier.
Buffers: Total provisions stand at 1.65% of advances, including Rs 100 crore each for expected credit loss and war contingency, which management expects to absorb the ECL transition.

The Rs 2,500 crore technically written-off pool yielded Rs 82 crore of recoveries in the quarter. BOBCAPS sees it supporting lower credit costs.

Anatomy of the Q2 RoA of 2.10%

Core operations ~1.83%

0.21%

Maroon: written-off recoveries (21 bps). Gold: treasury income (6 bps). Core share derived as the residual.

How BOBCAPS gets to Rs 413

Sep'28E ABV (implied)

~Rs 197

Target multiple

2.1x 1.8x

Target price

Rs 413

The brokerage expects FY27 RoA and RoE of 2.03% and 19.5%, and believes the 18–20% loan growth guidance is achievable as subdued working-capital utilisation recovers with easing tariff uncertainty and festive demand.

Y/E March (Rs crore)	FY26A	FY27E	FY28E	FY29E
Net interest income	4,939	5,856	6,820	7,959
Net profit	2,510	3,009	3,518	4,107
EPS (Rs)	26.0	31.1	36.4	42.5
Book value per share (Rs)	145.9	174.0	206.7	244.9
P/E (x)	13.3	11.1	9.5	8.1
P/BV (x)	2.4	2.0	1.7	1.4
RoA / RoE (%)	2.0 / 19.3	2.0 / 19.5	2.0 / 19.1	2.0 / 18.8

Editor's Note

The report's earnings-call notes say net interest income grew 25% year-on-year, but its own quarterly table shows 18.7% (Rs 1,497 crore against Rs 1,261 crore), a figure the headline commentary also implies. TopNews has used the table figure.

The call notes cite total advances of Rs 1,11,589 crore, while the quarterly table shows Rs 1,11,015 crore. This likely reflects gross versus net advances and is not treated as an error. The report prints only two risks, so TopNews has added a third, clearly labelled, drawn from the report's own disclosures.

Risks to watch

Bancassurance squeeze (BOBCAPS): Proposed IRDAI rules could cut life-insurance commissions by 60–70%. Bancassurance earned Rs 165 crore last year, and the bank would need to lift penetration from 1.6% to 3.8–3.9% while diversifying into health, property and corporate-risk products.

Gold-loan competition (BOBCAPS): Industry bureau data point to rising gold-loan stress. KVB reports no ground-level strain, but rivals offering higher LTVs or lower rates could test its underwriting discipline.

Tariff-hit borrowers (TopNews addition): Textiles form 5% of the book, and utilisation among US-focused exporters is only 55–56% amid tariff uncertainty.

Levels at a glance: Karur Vysya Bank · BUY (BOBCAPS) · CMP Rs 346 · Target Rs 413 (from Rs 362) · Upside ~19% · 52-week range Rs 223–359 · Basis 2.1x Sep'28E ABV

Sources: BOB Capital Markets Ltd, Karur Vysya Bank Q2FY27 Result Review dated Oct. 16, 2026 (Catherine Gomes, Research Associate); company data and NSE prices as cited in the report. Figures converted to Rs crore. Market cap derived from the report's share count; implied ABV is the target divided by 2.1x; the RoA bar uses the report's DuPont commentary, with core share as a residual.

Disclaimer: Investments in securities market are subject to market risks. Read all the related documents carefully before investing. TopNews report summarises brokerage research and is not investment advice.

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