Karnataka Bank can touch Rs 125: SP Tulsian

SP Tulsian, sptulsian.com feels that Karnataka Bank can touch Rs 125 in six months.

Tulsian told CNBC-TV18, "Banking space has been again gaining the confidence and the visibility. If you see largely the private sector bank like Dhanlaxmi, DCB or maybe the IndusInd Bank and Yes Bank they have already been in the limelight largely because of the fundamentals as well as the trading interest. But Karnataka Bank has been lying low. Earlier Karnataka Bank and Lakshmi Vilas Bank two used to also be quite favorite. But for quite some time maybe for last three months or so the Karnataka Bank has been languishing and ruling at a very low level largely because we have seen slight increase in the non-performing net NPAs in the December quarter and that has probably disappointed the market."
He further added, "If you take their tech savvy nature, there is no identified promoter. The talks are that probably this is seen as a takeover target. There were couple of serious buyers those who have been deliberating with the large investors who are holding chunk of maybe close to about 10-12% stake in the bank. So I think with close to 500 branches, right now the bank has about 480-485 branches with ATM centers of close to about 300 and if you go by the  financial performance they are likely to post an EPS of Rs 12 for FY12."
"Apart from that price-to-book is at 0.7, the book value is close to about Rs 130. So taking all this into consideration and since as I said that there is no identified promote; 25% are held by FIIs, 30-31% by HNIs and balance with the public, this can see interesting corporate developments going ahead also. But even if somebody keeps a view purely from the fundamentals I think the stock has good potential to off upside. Again this stock should come on the radar of the fundamental investors and they will give a look to the stock. I am expecting a price of about Rs 125 in six months largely because price-to-book is 0.7 and PE multiple of about 7.5-8 times." Disclosure: I have holding investments in S Kumars.