Rajesh Agarwal of Eastern Financiers told CNBC-TV18, "Banking sector is going to outperform once economy starts improving, once interest rate starts going down. We believe that it is just a matter of time maybe six months down the line we will see things improving."
He further added, "Karnataka Bank is one of the very good banks with around 550 branches. The numbers were bad this quarter; PAT went down by around 75 percent due to higher provisioning. However, on the positive side, net interest income went up by 22 percent, even on valuation parameters it is trading at a PE of Rs 5."
"The best part is the market cap of this bank is around Rs 1800 crore and with a branch network of 550 plus it is only Rs 3-3.5 crore per branch which makes this a very attractive proportion for any bank which wants to take over this bank. For example maybe after the new regulation for the foreign banks this is one of the prime candidates for acquisition. Anything of this sort would be a big trigger. Setting this acquisition trigger aside one can hold this bank and buy on dips with a target of Rs 140 in the next one year," Agarwal said.
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