South Indian Bank - RBI Approval For Appointment Of PR Seshadri As MD, CEO A Key Positive: ICICI Securities

ICICI Securities Report

The Reserve Bank of India has approved the candidature of Mr PR Seshadri (excluding Managing Director and Chief Executive Officer of Karur Vysya Bank Ltd.) as MD and CEO of South Indian Bank Ltd. for three years with effect from October 01, 2023.

In our view, Mr. Seshadri was instrumental in putting new-age lending practices, overhauling risk architecture and transforming HR practices at Karur Vysya Bank during his term (September 2017-March 2020), a time when the banking system was undergoing severe profitability pressure due to corporate asset quality cycle.

We believe the ongoing transformation journey at South Indian Bank, initiated by incumbent MD and CEO, Mr. Murali Ramakrishnan, should get accelerated.

South Indian Bank trades at an inexpensive ~0.65 times FY25E adjusted book . We raise our target multiple from ~0.7 times to ~0.8 times and our target price to Rs 28 (versus Rs 25). Maintain 'Buy'.

Key risk: a possible lack of seamless MD and CEO transition and higher-than-expected stress formation at the bank.

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