SOUTHBANK.BO - South Indian Bank

[valueinvesting101]

There is discussion about South Indian Bank on J&K Bank thread

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/jkbanknse-jammu-and-kashmir-bank

 

Pabrai talked about J&K bank in some detail during his Boston college interview. All the things he said can be applied to South Indian Bank as well. I find South Indian Bank (SIB) better than J&K Bank (JKBK).

 

South Indian bank is Kerala focused bank with 439/800 branches in Kerala. Further it has 139 branches in Tamilnadu, 48 in Andhra Pradesh (before split of this state), 43 in Karnataka, plus 53 in Maharashtra, Goa and Gujarat combined. Bank benefiting from GDP growth of country then SIB looks better positioned than JKBK.

 

Kerala state is different than most of the states in India in certain unique ways. It is ruled by communist party since last few decades. State has one the leading HDI in the country but also high unemployment rate among local population. Kerala has large number of resident working in gulf state which send nearly $9.6bn of remittance every year. This has supported local economy during last 4 decades. This remittance is sticky and percolates through state's economy.

 

Kerala GDP growth for last few years is better than J&K and overall business environment is much less risky. SIB's presence is other southern and western states makes it better positioned to capture GDP growth in the country.

 

Few PE funds and large investors have hold more than 50% of shares and this financially savvy shareholders form better shareholder group than J&K government. SIB is not particularly well run bank with most of the operating parameters are mediocre compared to best in the business pvt. banks. In the light of recent acquisition of ING Vysya Bank (INGVY)  by Kotak Mahindra Bank (KMB) bodes well for SIB as acquisition target for in future. Founding shareholder of KMB need to bring down his shareholding to 30% by December 2016 and to 20% by December 2018 from current 34% post acquisition of INGVY. No government holding and more than 50% shareholding makes SIB a better acquisition target. With RBI focusing on financial inclusion and spread of banking in the country, SIB can become acquisition target for new banks which received banking licences such as IDFC as well as NBFC such as L&T Finance which are looking to enter into banking space.

 

On fundamental basis bank trades as P/E of 8, close of P/B of 1. It has grown its net income 2.5 times over last 5 years. This should improve if GDP growth picks up. Easing visa rules definitely looks positive for Kerala.

 

 

[Carvel46]

Thanks for posting this.

 

I don't want to sidetrack this thread but as basic housekeeping, can US residents purchase Indian securities? How? I am not a NRI.

 

Thanks.

[one-foot-hurdles]

south indian bank is not available for purchase for foreign investors (nri's included).

 

http://profit.ndtv.com/news/market/article-rbi-restricts-foreign-investors-from-buying-south-indian-bank-shares-594051

 

 

[zizou]

was just looking at JKBK IN Equity; noticed a 30% drop...

Anyone following this? I'll start to look into this one

[jason]

I noticed the drop in JK bank as well.  My wife is an Indian but we live in Canada so Im not sure if she can purchase Indian banking stocks.  Certainly seems like an area that is ripe for growth.

 

My preference would be South Indian Bank.  J&K certainly seems more risky.

[one-foot-hurdles]

You can buy banking stocks such as j&kbank if you hold a non residnt indian (nri) brokerage account. But you cannot buy south india bank as this is currently restricted for residents only.