Maintain ‘buy’ on SIB with revised target price of Rs 11

Strategy driven by improvement in 6Cs; RoA/RoE to improve to over 1%/13%. The management team of SIB hosted a concall to discuss their Vision 2024 strategy. The medium-term strategy would focus on 6Cs, with an aim to strengthen its financial performance and build shareholder value.

By FY24, the bank aims to reach a loan book of Rs 1 trillion (from Rs 655 billion currently), CASA mix of 35%, PCR of over 65% (~38% currently exclusing write-offs), NIM of 3.5% and RoA/RoE of over 1%/13%.

Following are the 6Cs that the management has identified as part of its medium term strategy, capital, CASA, cost-to-income, competency building, customer focus, and compliance. Capital remains one of the most important pillars of this strategy and SIB aims to shore-up its capital base over the near term.

Building liabilities with deepening of NRI/Kerala franchise, SIB aims to leverage its Kerala franchise and further strengthen its NRI deposit base. It is looking to re-organise its team structure, with a new vertical focusing on Kerala and other parts of the country. It is further looking to partner with exchange houses, banks, and remittance platforms to expand into geographies from where it can tap the NRI business.

‘Fair to customer – Fair to bank’ is the philosophy that the management is going to follow as it looks to diversify its product offerings. Assets and liabilities teams would work closely for creating value for existing customers.

Asset strategy – Retail, Agri and MSME to gain focus. The bank plans to increase its focus on Retail, Agri, and MSME segments and aims to capture a higher wallet share via enhanced customer experience through digital analytics.