Karur Vysya Bank's stock surged over 10% on July 21, following the private sector lender's strong Q1 results for FY27. The share rose to an intraday peak of Rs. 341.10 on the NSE after opening at Rs. 310.05. The rally came just a day after the bank released its quarterly results, which saw the share price close 3% lower. At the press time, the stock trades at Rs. 338.55, with an increase of 12.48%.
The rally followed a strong 44.92% year-on-year (YoY) growth in net profit to Rs. 756 crore, marking the lender's fastest earnings growth in 11 quarters.
Karur Vysya Bank showed a broad-based rise in operations in the June quarter. Net interest income (NII) grew 32% YoY to Rs. 1,423 crore, supported by a 19% jump in interest income to Rs. 3,049 crore.
The net interest margin (NIM) stands at 4.34%, which is 48 basis points higher compared to the previous year, and 2 basis points higher sequentially. The pre-provision operating profit (PPoP) rose by 36.15% YoY.
Growth in the business sector was also strong. The gross advances increased 17.13% from the previous year to Rs. 1.05 lakh crore, and the deposits rose 14.94% to Rs. 1.23 lakh crore. The RAM (Retail, Agriculture and MSME) portfolio grew at a faster pace than overall credit growth, with a YoY gain of 18% to Rs. 90,324 crore.
The gross NPA ratio declined slightly to 0.74% from 0.75% in the last quarter, while the net NPA ratio remained flat at 0.19%. The provision coverage ratio was at 96.21%, and provisions fell by around 24% YoY to Rs. 90.3 crore.
"The bank’s total business reached Rs. 2,27,267 crore, reflecting our sustained growth momentum in the first quarter, with an overall business increase of 6% QoQ and a year-on-year growth of 16%. Our advances crossed Rs. 1 lakh crore during the current quarter and stood at Rs. 1,04,680 crore, representing a growth of 6% QoQ, while deposits increased to Rs. 1,22,587 crore, achieving a QoQ growth rate of 6%. Building on its strong performance, the bank recorded its highest profit of Rs. 756 crore," said Ramesh Babu B, Managing Director and CEO, Karur Vysya Bank.
The bank also updated its Marginal Cost of Funds Based Lending Rates (MCLR) from 22nd July 2026 onwards. The overnight MCLR rate was hiked from 8.80% to 8.85%, the one-month rate from 8.70% to 8.75%, the six-month rate from 9.10% to 9.15% and the one-year MCLR from 9.30% to 9.35%, while the three-month rate stood unchanged at 8.95%
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PL Capital has retained its 'Buy' rating on the stock with an estimated stock price of Rs. 345. "While loan growth for FY27 is guided at 1-2% above industry, the bank would prefer RAM (retail, agriculture, and MSME) growth while being cautious on corporate. We see loan growth of 17% and 16% in FY27E and FY28E, respectively," said PL Capital.
"NIM performance has been strong for the last four quarters due to calibration in asset mix; NIM for Q2FY27 is guided to be more than 4% with upside risk, while full-year NIM guidance of 3.7-3.8% would be revisited post Q2FY27. We raise NIM by 5 bps each for FY27E and FY28E, leading to a core PAT upgrade of an average 2.7%. We keep multiple at 1.7 times and maintain the target price of Rs. 345, and retain a 'buy'," said the brokerage firm.
According to ICICI Securities, the brokerage has maintained its 'Buy' call while raising the target price to Rs. 400 from Rs. 360.
"We note management sounded more comfortable, versus the last quarter, about the near-term NIM trajectory. We highlight the possibility of an upward revision in FY27 NIM guidance. We raise FY27E and FY28E EPS by nearly 7% and 4%, respectively, and now estimate RoA of nearly 2% and 1.9%, respectively, over the same period. Karur Vysya Bank is one of the top ideas in the sector," said ICICI Securities.