South Indian Bank Q2FY26 (Sep 2025) | 351 Cr PAT, 2.93% GNPA, 55% 1-Year Return — From Near-Death ICU to Malayalam Miracle
1. At a Glance
The 96-year-old South Indian Bank (SIB) — the grandpa of Kerala banking — has suddenly become the cool uncle of the small-cap banking party. Once mocked as “the last surviving dinosaur of Thrissur”, it’s now trading near ₹38.8, up 31.7% in 3 months and 55.9% in a year, while some new-age fintech bros are still trying to figure out how interest rates work.
Market Cap? ₹10,145 crore. Book Value? ₹40.6 — meaning the stock is trading at just 0.96x book, cheaper than a second-hand dosa tawa. PAT for Q2FY26: ₹351 crore (8% QoQ, 8.2% YoY). NIM: 3.3%. ROE: 13.8%. Gross NPA: 2.93%. Net NPA: 0.56%. CASA: 31.9%.
The balance sheet now has ₹1.36 lakh crore in assets, ₹1.15 lakh crore in deposits, and more digital activity than a teenage gamer — 97.5% transactions online. Once considered a South-only lender, SIB’s turnaround has been nothing short of cinematic — the “Lucifer” of Indian banking, with a new director, fewer scams, and a surprisingly fit NPA figure.
2. Introduction
There was a time when saying you held South Indian Bank shares was like confessing to still using a Nokia 1100. Now, suddenly, everyone wants to “revisit” their valuation model — which is code for “we laughed too early”.
Founded in 1929, when RBI itself was in beta testing, SIB is Kerala’s oldest private sector bank. It has 948 branches, 1,315 ATMs, and a loyal fan base that still thinks cheque leaves are magical documents.
The last decade was brutal — slow loan growth, high NPAs, zero brand recall outside Kochi weddings, and constant regulatory drama. But somewhere between FY22 and FY25, the management finally started behaving like they attended a risk-management workshop.
NIMs stabilized around 3.2–3.3%, asset quality improved, and the bank cleaned up its loan book. It even dared to raise ₹1,150 crore through a rights issue at ₹22/share in FY24 — the corporate equivalent of saying, “We’re done begging RBI for oxygen.”
And now, after decades of “almost-turnaround” stories, SIB’s numbers finally match its hype.
So… is this the Malayalam banking comeback story of the decade? Or just another pre-interval twist?
3. Business Model – WTF Do They Even Do?
Think of SIB as a mini HDFC Bank clone, but with a strong South Indian accent and a limited budget for advertising.
The business model is your standard retail + corporate + treasury cocktail:
Business Loans (20%) – For traders who think balance sheets are optional.
Corporate Loans (38%) – Mostly A & above rated, because SIB finally learned the “no more random builder funding” lesson.
Agriculture (19%) – Because every Kerala bank needs one coconut tree in its portfolio.
The bank earns from:
Interest income on loans (yield on advances: 9.28%).
Treasury operations, playing bond markets like a cautious mutual fund uncle.
Fee income, selling insurance, mutual funds, and remittances.
And yes, it still does forex and NRI remittances, because half the Malayali diaspora trusts SIB more than the UAE Central Bank.
The geography mix says it all:
36% of advances in Kerala
34% in South ex-Kerala
30% in Rest of India
Essentially, still a South Indian soul — but trying hard to sound cosmopolitan.
4. Financials Overview
Metric
Latest Qtr (Q2FY26)
YoY Qtr (Q2FY25)
Prev Qtr (Q1FY26)
YoY %
QoQ %
Revenue
₹2,407 Cr
₹2,355 Cr
₹2,362 Cr
2.2%
1.9%
EBITDA (Financing Profit + Other Income)
₹472 Cr
₹440 Cr
₹433 Cr
7.3%
9.0%
PAT
₹351 Cr
₹325 Cr
₹322 Cr
8.0%
9.0%
EPS (₹)
1.34
1.24
1.23
8.1%
8.9%
Annualised EPS: ₹5.36 At CMP ₹38.8 → P/E = 7.2x (cheaper than a PSU officer’s Diwali loan).
👉 Commentary: Margins held firm despite RBI’s rate drama. Profit grew faster than deposits — a rare sight for this bank. Gross NPA at 2.93% is the lowest in its modern history; Net NPA at 0.56% is practically a miracle. Basically, the patient not only survived — it’s jogging.
5. Valuation Discussion – Fair Value Range
Let’s do this the Edu way — with data, not drama.
(a) P/E Method: Current EPS (annualised): ₹5.36 Industry Avg P/E: ~13x Fair Value Range = ₹5.36 × (8x–12x) = ₹43–₹64
(b) EV/EBITDA Method: EV = ₹1,27,462 Cr (from screener, likely inflated due to deposits) EBITDA proxy (Operating profit FY25): ₹1,757 Cr EV/EBITDA = ~7.2x (normalised) Peer average (private banks): 9–12x Fair Range = 7–9x = ₹45–₹60
(c) DCF Snapshot (Conservative): Assume Profit CAGR 10%, Cost of Equity 12%, Terminal Growth 4% Intrinsic Range = ₹44–₹58
📊 Overall Fair Value Range (Educational): ₹44 – ₹60/share.
⚠️ Disclaimer: This fair value range is for educational purposes only. It is not investment advice, not even casual flirting advice.
6. What’s Cooking – News, Triggers, Drama
Let’s check recent headlines from the SIB soap opera:
Oct 2025: PAT ₹351 Cr; GNPA 2.93%; Net NPA 0.56% — record low!
Aug 2025: AGM approved ₹0.40 dividend and Tier-II bonds up to ₹1,000 Cr.
Jun 2025: RBI approved Dolphy Jose as Whole-time Director — probably Kerala’s most relieved man.
Mar 2024: Fraud detected at one branch, ₹28.6 Cr provisioned. Classic. Every old bank keeps one skeleton for nostalgia.
Mar 2024: Rights issue ₹22/share (1:4 ratio) successfully subscribed — shareholders actually trusted them again.
Oct 2024: RBI penalty ₹59 lakh — now just small slaps instead of knockout punches.
