CSB Bank experienced its sharpest intra-day surge in the past 10 months, with shares soaring 13% to Rs 254.15 amid heavy trading volumes during the early hours today. According to BSE data, the stock rallied 13.5% on May 6, 2022.

CSB Bank traded 9% higher at Rs 245.75 at 2:27 pm, while the S&P BSE Sensex rose 0.7%. Trading volumes on the counter increased five-fold, with around 2.5 million shares changing hands on the NSE and BSE, representing 1.4% of CSB Bank’s total equity. The stock hit a 52-week high of Rs 275 on December 19, 2022. The stock closed at Rs 245 per share, a 7.7% increase from the previous close.

Recently, the stock has corrected from its high of Rs 275 and has been hovering near its 200 DMA of around Rs 224. However, according to analysts, the stock is now breaking above the 50 EMA zone with a positive bullish candle pattern on the daily chart. They suggest buying and accumulating the stock, with an upside target of Rs 260-275 and a stop loss near Rs 220.

CSB Bank is a private sector bank based in South India, with Kerala contributing around 30% of its total advances. The bank’s changed lending strategy in various aspects has led to a transformation and improved performance in recent years. Gold and SME are the key lending segments, comprising approximately 45% and 12%, respectively, of the book.

ICICI Securities analysts predict that the bank’s persistent emphasis on gold loans and incremental enhancements in the non-gold sector will stimulate consistent growth. They anticipate that the bank will achieve a credit growth rate that exceeds the industry average, with an RoA of approximately 2% or higher. Although investing in branches, personnel, and technology may initially increase operating expenses, the benefits will accrue gradually over time.

The on-track performance and gradual ramp-up in liability franchise will also aid business growth. The brokerage firm has revised its target price for the bank to Rs 300 from Rs 275, citing key triggers for future performance, such as the sustenance of the gold business, gradual improvement in the non-gold segment, and steady RoA.