Buy Karnataka Bank; target of Rs 135: Arihant Capital

Arihant Capital's research report on Karnataka Bank

Karnataka Bank Ltd Q2FY19 profitability has substantially improved YoY. It has reported PAT of Rs 112 cr. in Q2FY19 vs Rs. 93 cr. in the corresponding quarter of last fiscal year. On a QoQ basis, the net profit fell by 32%. Operating profit of the bank de-grew by 3.4% QoQ and 2.7% YoY at Rs. 356 cr. NII for the quarter grew by 6% YoY at Rs. 468 cr. vs Rs. 440 cr.

Outlook

We retain our target price at Rs.135 same as previous quarter, valued at 0.9(x) to its FY 20E ABV. This is an upside of 36%. We have a ‘BUY’ rating for the stock.