The Karnataka Bank Limited

Financial Services — Banks - Regional · NSE

₹329.00−₹6.95 (−2.07%)

DalalBaazaar Score

66 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by small-cap size, which brings sharper price swings.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of The Karnataka Bank Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

The Karnataka Bank Limited provides various banking and financial services in India. It operates through four segments: Treasury operations, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations.

IndustryBanks - Regional

SectorFinancial Services

Employees9,037

Annual revenue₹4,522 Cr

How does it make money?

Turns over ₹4,522 Cr a year. Of every ₹100 of sales, about ₹29 reaches shareholders as profit. Each of its 9,037 employees supports ₹50.0 lakh of revenue a year, the signature of a people-led business.

Net margin29.0%

Revenue / employee₹50.0 lakh

Who are its competitors?

The closest listed comparisons in its industry are HDFC BANK LTD, ICICI BANK LTD., KOTAK MAHINDRA BANK LTD, AXIS BANK LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

HDFC BANK LTDP/E 15.9x · ROE 13.8%

ICICI BANK LTD.P/E 18.1x · ROE 16.5%

KOTAK MAHINDRA BANK LTDP/E 21.9x · ROE 11.2%

AXIS BANK LIMITEDP/E 14.5x · ROE 13.4%

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

ROE9.9%

Peer median ROE13.8%

What is the outlook?

2 analysts covering the stock expect revenue to grow about 13.8% and earnings to grow about 13.3% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+13.8%

Est. earnings growth+13.3%

Analysts2

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +8% while net margin moved +3% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+8%

Margin effect+3%

DalalBaazaar Score

66/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.7% — barely ahead of inflation
✗ Profit CAGR of only 3.6%

Quality vs. Valuation

Company Quality

67/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

61/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

8.7x

3Y Median

6.0x

40 monthly readings · mean 6.3x · range 4.2x–9.7x

Sector Median

17.0x

median of 4 sector peers

⚠️Current valuation is approximately 45% above its 3y median of 6.0x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 49% below the peer median of 17.0x.

vs. its own history

Expensive

6.0x median over 40 months · +45%

vs. sector peers

Cheap

17.0x median of 4 peers · -49%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

8.7x

P/B

0.94x

EV/EBITDA

—

PEG

2.43

Dividend Yield

1.52%

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 14.4% to 9.9% — each rupee of shareholder capital earns less than it did.
Valuation above its historical average
At 8.7x the stock trades 45% above its own median of 6.0x.

Red Flags

1 item require attention · 1 watch

🟡Shareholders have been dilutedOwnership
Shares outstanding are up 21% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 49% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The price already assumes success
The stock trades 45% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Growth barely outpaces inflation
Revenue compounding at 2.7% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Returns on shareholder capital are falling
ROE has dropped from 14.4% to 9.9%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Return on equity stays above 8%✓ 9.9%
For a lender this is the cleanest single read on whether the book is being grown profitably.
2Revenue growth stays above 4% a year✗ 2.7% CAGR
Latest reported year was 26.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Valuation vs its own median of 6.0x✗ 8.7x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 10 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✗ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 4 neutral · 1 weak

Market Cap

₹12,449 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

8.7x

Cheap

Cheap against the generic band

P/B Ratio

0.94x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹37.95

Profitable

Profitable on a per-share basis

ROE

9.9%

Moderate

Moderate capital efficiency

ROCE

Not meaningful

N/A for lenders

Banks and NBFCs don't report capital employed the way other businesses do

Debt/Equity

6.56x

High

High leverage

Revenue Growth (YoY)

26.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

43.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.52%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹1,011 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹329

P/E (Forward)

6.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

43.6%

Good

Healthy core-business profitability

Net Margin

41.5%

Good

Strong bottom-line conversion

Beta (vs Nifty)

0.33

Defensive

Steadier than the market

52W Range Position

90%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

329.2 / 325.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

46.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹4,178 Cr	₹4,626 Cr	₹4,580 Cr	₹4,522 Cr	+2.7%
PAT (Net Profit)	₹1,180 Cr	₹1,307 Cr	₹1,273 Cr	₹1,311 Cr	+3.6%
EPS	₹37.64	₹39.67	₹33.63	₹34.61	-2.8%
ROE	14.4%	12.0%	10.5%	9.9%	—
Total Debt	₹1,563 Cr	₹2,401 Cr	₹1,941 Cr	₹867 Cr	-17.8%
Free Cash Flow	₹1,741 Cr	₹569 Cr	-₹483 Cr	₹1,011 Cr	-16.6%

🟢 Revenue has grown at 2.7% a year over 3 years.

🟢 PAT (Net Profit) has grown at 3.6% a year over 3 years.

🔴 EPS has shrunk at 2.8% a year over 3 years.

🔴 ROE has fallen from 14.4% to 9.9% over 3 years (-4.5 pts).

🟢 Total Debt has shrunk at 17.8% a year over 3 years.

🔴 Free Cash Flow has shrunk at 16.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1.29 L Cr

Total Liabilities

₹1.16 L Cr

Total Debt

₹867 Cr

Cash & Equivalents

₹17,026 Cr

Operating Cash Flow

₹1,100 Cr

Capex

-₹89 Cr

Shareholding (proxy)

Institutional Holding

21.3%

Insider Holding

5.6%

Corporate Actions

Dividend Rate

₹5

Ex-Dividend Date

15 Sept 2026

Analyst Consensus

Recommendations

2 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹344.5

+4.7% vs CMP

Target Range

₹325 – ₹364

Peer Comparison

Company	P/E	ROE
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%
KOTAK MAHINDRA BANK LTD	21.9x	11.2%
AXIS BANK LIMITED	14.5x	13.4%

Recent News

1 mixed5 general

Karnataka Bank (NSEI:KTKBANK) Stock Forecast & Analyst Predictions

Simply Wall Street, 09 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

KTKBANK 52 Week High Streak: Fundamental and Sector View

Univest, 13 Oct

Five Stocks To Buy, Today October 14: HAL, Karnataka Bank, Happiest Minds, And More

NDTV Profit, 14 Oct

Vinay Rajani favours buy-on-dips in Nifty; bets on HAL, Karnataka Bank

Business Standard, 14 Oct

The Karnataka Bank Share: Bull Case vs Bear Case for 2026

Univest, 25 Sept

Buy Karnataka Bank; target of Rs 364: Anand Rathi

Moneycontrol.com, 31 Jul

Watch Items

Trading very close to its 52-week high — momentum-driven entries here carry more mean-reversion risk.
This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong18/20

🟢Financial HealthStrong17/20

🔴GrowthWeak7.4/20

🟡ProfitabilityModerate7.5/15

🟢ValuationAttractive9.8/15

🟡RiskModerate6.2/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

This thesis breaks if

✓Return on equity stays above 8%9.9%
✗Revenue growth stays above 4% a year2.7% CAGR
✗Valuation vs its own median of 6.0x8.7x today