South Indian Bank (NSE:SOUTHBANK) has witnessed a massive bull run followed by the strong move in PSU stocks. Shares of this PSU Bank have returned nearly 190% in the last one year.
In March 2023, SOUTHBANK was trading at a price of ₹12.55 per share, and now in just one year, the stock has marked an all time high of ₹36.80.
Stocks of SOUTHBANK is now trading near its 52 Week high. Due to profit booking by investors and sell off in Nifty, stocks of South Indian Bank have also experienced sell off , witnessing a fall of 16% from its high.
Entire PSU sector, which was once undervalued has been the top performing sector in the last one year and it looks like the rally still have potential left. For day traders, do check daily price targets for SOUTHBANK
Why stocks like SOUTHBANK are rising?
Rise in the share price of SOUTHBANK can be due to multiple technical and fundamental factors. If we talk technically, the entire sector (NIFTY -PSUBANK) has been in a phase of consolidation for the last 10 years.
Even after the massive bull run after Covid-19, the PSU sector performed moderately compared to other sectors. But as Prime Minister Narendra Modi emphasised on PSU’s in Rajya Sabha, it triggered a massive Bull rally. The longer is the phase of consolidation, stronger is the bullish move once stocks break out of the range.
Another reason is improving the financials of SOUTHBANK. The bank has displayed an improved return on its equity. Its Net profit has also been rising quarterly (YOY).
Shares of SOUTHBANK has performed impeccably this year with its EBITDA and Net Profit being highest this year compared to the last 10 years.
Each quarter, the bank has showcased an increase in its sales number, growing by 15.1 (QOQ). Investors also like to buy stocks like SOUTHBANK as they regularly pay dividend income.
Not only domestic but foreign institutional investors have also increased their stakes in SOUTH BANK , rising confidence of retail investors. All these reasons contribute to the rise of its price.
Will SOUTHBANK Grow more?
If you want a one word answer – Yes, Share price of SOUTHBANK will continue to rise further. Looking at its Price to earning ratio, The South Bank is trading at a P/E of 5.9x, which is lower than the industry average of 9.8x
Since Southbank is considered relatively undervalued with a lower P/E multiple, we can conservatively project an expansion of its valuation ratio.
Assuming the P/E ratio rises modestly from the current 5.9x towards 8x, which is near the lower end of the peer average, we can calculate a target price estimate. At the present market price of Rs 31, a future P/E of 8x would imply a share price of Rs 248 (31 x 8).
In essence, if Southbank’s P/E ratio were to catch up with its peers and reach 8x based on improving investor sentiment, its stock could trade around Rs 248. This price target represents potential upside if the underlying assumptions hold true.
Important Support levels for SOUTHBANK
| Support Level | Price (₹) |
|---|---|
| Support 1 | ₹30.50 |
| Support 2 | ₹28 |
| Support 3 | ₹26 |
| Support 4 | ₹24.30 |
| Support 5 | ₹22.10 |
SOUNTBANK's Swing trading forecast
| Swing trading Forecast Level for SOUTHBANK | Price (₹) |
|---|---|
| Forecast 1 | ₹32.10 |
| Forecast 2 | ₹34 |
| Forecast 3 | ₹35.50 |
| Forecast 4 | ₹37 |
| Forecast 5 | ₹39.20 |
SOUTHBANK's Return on Equity
| Time Period | Return on Equity (%) |
|---|---|
| 1 Year | 12.37% |
| 3 Years | 4.76% |
| 5 Years | 4.24% |
SOUTHBANK NPA data last 5 years
| Time Period | Net NPA (%) |
|---|---|
| 1 Year | 1.86% |
| 3 Years | 3.18% |
| 5 Years | 3.27% |
SOUTHBANK's Dividend data
| Ex Date | Dividend Percentage | Dividend Amount (Rs.) |
|---|---|---|
| 17 Aug 2023 | 30% | 0.3 |
| 09 Jul 2019 | 25% | 0.25 |
| 03 Jul 2018 | 40% | 0.4 |
| 03 Jul 2017 | 40% | 0.4 |
| 30 Jun 2016 | 50% | 0.5 |
SOUTHBANK's Shareholders data
| Owner | Ownership Percentage |
|---|---|
| State or Government | 0.583% |
| Private Companies | 1.91% |
| Individual Insiders | 4.32% |
| Institutions | 21.8% |
| General Public | 71.3% |
Final Words
To conclude, SOUTHBANK is in a sweet spot right now and offers a compelling investment opportunity. The stock has seen a phenomenal bull run in the last 1 year, but still seems to have steam left based on its valuation.
Fundamentally, the bank is displaying improving performance across metrics like net profit, return on equity, asset quality etc. Its financial health appears to be on an upswing. With both technical and fundamental factors aligning positively, further upside seems likely.
However, its important to keep eye on the bank’s fundamentals and its growth projections. When the move is linear like the sector witnessed, corrections are also aggresive. For long term investors, do check AI forecast for SOUTHBANK upto 2030.
