Ace Investor Mukul Agrawal Adds Stake in Rakesh Jhunjhunwala Held Private Bank Stock

Stocks can be risky investments. The past three days' carnage has had investors thinking along these lines.

Huge intraday swings and relentless volatility seem to have only grown more frequent and intense in recent years.

After falling consistently for six consecutive sessions, benchmark indices jumped sharply in early trade today, with the BSE Sensex gaining over 500 points in early trade. The 50-share Nifty 50, too, made a strong comeback today as it rose above 19,000 levels.

The relief rally came on the back of a 6-day losing streak of improvement in global cues, following easing US treasury yields after weaker-than-expected inflation data.

During volatile phases like the current one, many investors turn to investment experts who possess deep knowledge of the market and a thorough understanding of the companies they invest in.

For those closely monitoring these developments, this article provides the latest insights: Mukul Agarwal has recently added exposure to a banking stock.

Before moving on to company details, let's look at who Mukul Agarwal is and what are his top stock picks.

Who is Mukul Agrawal?

Mukul Agrawal is a prominent investor in India known for his microcap stocks and smallcap stock picks.

His style of investment involves a mix of offence and defence, with the majority of the time an offensive strategy after proper analysis and keeping two separate portfolios for investing and trading.

With over 55 stocks in the kitty, his portfolio is worth over Rs 30 billion (bn) as of September 2023.

Which Stock Did Mukul Agrawal Add and Why?

The stock in question is Karur Vysya Bank.

The bank is engaged in providing a wide range of banking and financial services, including commercial banking and treasury operations.

The latest shareholding pattern of Karur Vysya Bank shows that Mukul Agrawal held 1.1% stake in the company, as of September 2023.

Notably, in the June 2023 quarter, his name was missing from the list of shareholders.

Before this, in the March 2023 quarter, he held about 1.1% stake or 8.5 million (m) shares.

Mukul Agrawal's holding in Karur Vysya Banks as of 27 October 2023 amounts to Rs 1.3 billion (bn).

While we don't know why Mukul Agrawal added shares of Karur Vysya Bank, there are some reasons that we can guess.

#1 Promising Key Performance Metrics

During the second quarter of 2023, Karur Vysya Bank, a private sector lender, demonstrated significant year-on-year (YoY) improvement in its key financial performance indicators.

As of 30 September 2023, Karur Vysya Bank's total business volume reached Rs 1.5 trillion (tn), reflecting an impressive growth of 14.2% compared to the same period in the previous year.

The bank's total deposits increased to Rs 830.7 bn, marking a robust YoY growth of 13.2%.

Karur Vysya Bank's advances also saw remarkable growth, reaching Rs 704.5 bn as of 30 September 2023, representing a substantial 15.3% year-on-year increase.

Furthermore, the bank's Current and Savings Account (CASA) balance, a vital indicator of customer engagement and banking relationships, reached Rs 267.9 bn.

While this signifies a relatively modest YoY growth of 3.4%, it still reflects positive progress.

#2 Business Model Transformation

The private sector bank has started making changes to the model of its business to sustain growth momentum.

The 106-year-old private sector lender is adapting its business model to maintain its growth.

In the past, the primary way to attract loans or deposits was through branches. However, KVB is now expanding its channels by introducing various avenues.

The bank has established a retail liability sales force called 'Feet On Street (FOS)' with 500 initial hires in the last three months and plan to recruit an additional 800 within 18 months.

The FOS team's primary responsibilities include acquiring new accounts, servicing existing customers, and recovering loans. If the strategy succeeds, it will be implemented nationwide.

Regarding assets, the bank will concentrate on the commercial sector, which includes Retail, Agriculture, Micro, Small, and Medium Enterprises (RAM) with a current share of 79%, and the corporate sector, which accounts for 21% of the business.

On the liability side, KVB aims to enhance CASA deposits, corporate salary accounts, government business, and marketing third-party financial products through the FOS team.

In the retail sector, the bank will focus on home loans, loans against property, and personal non-agricultural jewel loans. Simultaneously, this could support agri-gold loans.

A Close Look at the Financials

For the quarter ending in September 2023, the bank reported a remarkable 28.3% year-on-year (YoY) increase in revenue, totaling Rs 233.6 bn. This quarter also marked the bank's highest-ever net profit.

Karur Vysya Bank disclosed a 51% growth in net profit, reaching Rs 3.8 bn for the quarter ending in September 2023, compared to Rs 2.5 bn in the corresponding quarter of the previous year.

Net interest income also saw substantial growth, with an 11.5% YoY increase, amounting to Rs 9.2 bn.

Furthermore, the bank's gross non-performing assets (GNPA) showed significant improvement, decreasing by 2.3% to stand at 1.7% of gross advances, equivalent to Rs 12.2 bn.

This was a notable improvement from the 4% GNPA or Rs 24.6 bn reported in the same period the previous year.

Additionally, the bank achieved a historic milestone by reaching Rs 1.5 tn in business during the September 2023 quarter.

Also, over the past three years, the company has experienced a 6.3% increase in revenue. This was on the back of an improved business outlook and easing geographical tensions.

The net profit exhibited substantial growth, with an impressive 45.5% increase. This remarkable growth in net profit can be linked to the company's prudent financial management practices and increased sales.

Financial Snapshot

(Rs bn, Consolidated)	FY21	FY22	FY23
Total Income	63.9	63.6	76.8
Income growth (%)	-	-0.01	20.7
Net profit	3.6	6.7	11.1
Net profit margin (%)	6.6	12	17

Data Source: Equitymaster

During the year, Karur Vyasa Bank has planned to open 35 more branches. After South India, the company will move towards Maharashtra and Gujarat to help SMEs.

What Next?

Looking ahead, Karur Vyasa Bank is planning to establish partnerships with fintech companies to support dairy farmers.

Discussions are in progress to collaborate with microfinance institutions to assist self-help and joint-liability groups in four districts of Tamil Nadu over the next three months.

For the financial year 2024, the bank has set a target of achieving more than 14% growth in both credit and deposits while maintaining a net interest margin of over 4%.

How Shares of Karur Vysya Bank have Performed Recently

Over the last one year, the share price of Karur Vysya Bank has gained 46.2%. In 2023 so far, the stock is up 33%.

Over the past six months, the stock has gained over 53.2%.

The company touched its 52-week high of Rs 152 on 18 October 2023 and its 52-week low of Rs 90.2 on 24 October 2022.

About Karur Vysya Bank

Karur Vysya Bank is a Scheduled Commercial Bank (SCB), headquartered in Karur in Tamil Nadu, India. It was founded in 1916 by M. A. Venkatarama Chettiar and Athi Krishna Chettiar.

The bank primarily operates in the treasury, corporate/wholesale banking, and retail banking segments.

To know more about the company, check out its factsheet and quarterly results.

You can also compare the company with its peers:

Karur Vysya Bank vs City Union Bank

Karur Vysya Bank vs Axis Bank

Karur Vysya Bank vs Bandhan Bank

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...