Karnataka Bank Q3 Review - Fundamental Changes Underway; Signs Of Stress In Restructured Book: Axis Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report.Karnataka Bank Ltd.'s margins are expected to remain under pressure until healthy growth in deposits resumes. The bank is focusing on cross-selling and data analytics to grow its non-interest income. Furthermore, the management remains confident of bringing down the cost/income ratio to a sub-50% level. Going forward, asset quality will be a key monitorable.Despite challenges, the management remains confident about growth in business prospects and maintains its earlier return of asset guidance of 1.2-1.4% and return of equity guidance of 14-16%. However, we model a ROA of 1.2% and ROE of +13.5% over FY24-26E..Valuation and recommendation:With margins under pressure, challenges in raising low-cost deposits, elevated opex, and moderation in asset quality, we believe the stock is fairly valued at the current market price. Thus, we revise our recommendation from ‘Buy’ to ‘Hold’ with a revised target price of Rs 275/share (0.8 times September 25E adjusted book value), implying an upside of 3% from the current market price..Key risks to our estimates and target priceThe slowdown in the systemic credit growth rate would impact our estimates..Click on the attachment to read the full report:.Hrithik Roshan, Deepika Padukone's 'Fighter' Reportedly Banned In These Countries.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Karnataka Bank Q3 Review - Fundamental Changes Underway; Signs Of Stress In Restructured Book: Axis Securities

The slowdown in the systemic credit growth rate would impact our estimates.

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Karnataka Bank Q3 Review - Fundamental Changes Underway; Signs Of Stress In Restructured Book: Axis Securities

The slowdown in the systemic credit growth rate would impact our estimates.

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