Multibagger stocks for 2022, south Indian bank stock with high risk & high returns

 Should you buy South Indian bank stock for long term?

South Indian bank, if we will talk about the Pro active banks in India then South Indian bank comes in the list of private sector banks having tech savvy professional team. South India bank has main focus on NRI’s and retail customers. In the basket of south India bank there are different kind of products & services which bank offers to its retail as well as overseas bank customers. 

This private sector bank has strong presence in the South states of India & bank is offering different range of financial products & services like deposit, saving, loans, internet banking, mobile banking, demat services, credit card, debit card, etc under the Personal Banking. South Indian bank has strong grip on mutual funds segment & having strong tie ups with the mutual funds companies like as Reliance Mutual Funds, HSBC Investments, HDFC Mutual Fund, Fidelity Fund Management, Principal Mutual Funds, ICICI Prudential AMC, Franklin Templeton, TATA Mutual Fund, Sundaram BNP Paribas, UTI Mutual Funds, Fortis Investments, Birla Sun Life Asset Management Company and DSP Black Rock Mutual Funds.

As we have discussed earlier that NRI’s have great interest in South Indian bank & Bank is also offering required services like deposit investment schemes, car loans, remittances, insurance etc Furthermore in the Corporate banking segment South Indian bank is also doing some business offering products & services like  working capital finance, project finance, structured finance etc.

South Indian bank Financial Analysis:

Total revenues of South Indian bank

South Indian bank financial performance is not much impressive from last few years but there are some reasons behind like less financial products & services demand from NRI’s & retail customers due to pandemic. In the financial year 2017 Total revenues of the bank was nearly 5847cr which increased in FY18 and reach at nearly 6200cr. If we will calculate the financial years 2019, 2020 & FY21 then Total revenues were 6876cr, 7763cr, & 7300cr respectively.

Net Profit of South Indian bank

South Indian bank performance has been declining from last 2 years. In the FY 20 south Indian bank net profit was nearly 105cr & In FY21, we had seen sudden drop in net profit of south Indian bank which dropped to 62cr. This drop in the net profit of the bank was already expected due to pandemic as well as low demand of the financial products from retail as well as NRI’s customers.

Earnings per share of South Indian bank:

Earnings per share of South Indian bank badly pushier due to poor performance of the bank where in FY17 eps of south Indian bank was around 2.60, In FY21 EPS of south Indian bank slipped to 0.34.

Gross NPA’s of South Indian bank:

South Indian bank recorded gross NPA’s 6.6% In FY 21. In FY17 percentage of gross NPA’s was nearly 4.9%. It means that Gross NPA’s of the bank had been increasing from last 5 years.Any bank having increase in gross NPA’s that will not a good sign for bank.

Net NPA’s of South Indian bank:

South Indian bank had reported Net NPA’s 3.89% in FY21 which is also very higher from FY17 net NPA which was nearly 2.6%.

Bonus offered by South Indian bank:

South Indian bank had also given bonus of 1:4 in 16^th oct 2008.

Should you Buy or sell South Indian bank Stock?

As per above discussion, there is no any question that South India Bank performance is not good from last 2 or 3 years and we have seen downfall in the net profit, revenues etc. But important thing is that stock price of the south Indian bank is trading at lower levels or we can say that bad performance is already factored in. Current market price of South Indian bank stock is 9.25rs ( 09-dec-2021, 12:06pm).  In September 2021 quarter results, bank had reported loss of nearly 190cr against net profit of June 2021 quarter results. Stock price of South Indian bank badly punished by traders in March 2020, which there was selling pressure in world markets as well as Indian stock market. From last few months South Indian bank stock price is trying to settling down in the price range of 6.80rs to 9.80rs Even after bad results o September 2021 quarter stock price o south Indian bank had recovered from lower levels. If performance of bank dropped in last 2 years then there was a solid reason behind it which we had discussed above.  

Recommendation on South Indian bank stock:

As per our view, South Indian bank stock is for high risk & high returns investors. If We believe that Indian economy will recover in the coming years & World is coming out of Covid pandemic then it is a best time to start accumulate south Indian bank stock for long term (2 to 3 years).

Long term targets of South Indian bank are 25rs+ but if the performance of the bank wills improve then south Indian bank may give multibagger returns in the coming years.

 What are the short term targets of south Indian bank share?

As per the technical charts, stock of south Indian bank is trying to build a base on lower levels & consolidating in the price range of 6.80rs to 9.80rs.

Buy South Indian bank share:

If Stock trade above 9.80rs & give close above this price level then short term targets are 10.20rs, 10.50rs, 10.80rs, 11.20rs, 11.50rs, 12rs, 12.30rs, 12.60rs, 12.85rs, 13rs, 13.20rs+

In this situation, trader should trail their stoploss or keep strict stoploss of 8.96rs on closing basis

In the coming months if we will see the breakout in south Indian bank stock above 13.65rs then we may see sharp upside in the stock and 18rs to 25rs price targets may be opened for this stock. But it is advisable to follow levels in the right way

Sell South Indian bank share:

In any case if South Indian bank stock gives close below 8.90rs then down side will be opened which may again drag the stock up to 6.80rs or below.

High risk & High Returns stock:

As we have discussed above that south Indian bank is for high risky traders & investors. We are trying to make a bet on recovery of Indian economy & South Indian bank management. Fundamentals of the bank are not supporting from last 2 or 3 years but we may see some recovery in the coming years. Therefore keep an eye on this stock if you want to take risk on your trade or investment.

Even we may see some kind of good news for south Indian bank regarding stake sale but as of now we have not such evidence. We are maintaining “Buy” call or south Indian bank for long term point of view with risk taking ability.