Karnataka Bank is a promising small-cap bank hailing from South India that’s making waves in 2023. Investors have seen a whopping 300% return in just one year—an impressive feat. The bank’s consistent reduction in Non-Performing Assets (NPAs) over the last eight quarters underscores its sound risk management. With shares currently trading at ₹242 and a market capitalization of ₹7,561 Crore, Karnataka Bank has caught the eye of many in the small-cap market. In this article, we’ll dig dive into the bank’s recent developments, its Q1 performance, potential stock price predictions from 2023 to 2030, and finally, whether Karnataka Bank is a good pick for your portfolio in 2023?
About Karnataka Bank
Karnataka Bank, founded on February 18, 1924, has grown into a premier bank offering a comprehensive range of customized products and services for both personal and business needs. With its headquarters in Mangalore, the bank has a rich history of achievements, including opening its first branch in Bombay, upgrading its classification from ‘D’ class to ‘C’ class, and taking over various banks like Sringeri Sharada Bank Ltd., Chitaldurga Bank Ltd., and Bank of Karnataka Ltd.
Over the years, the bank has expanded its network to include hundreds of branches across the country. It has achieved significant milestones, such as crossing the Rs. 1 crore mark in total business turnover, being included in the Second Schedule of the Reserve Bank of India Act, and upgrading from ‘B’ class to ‘A’ class.
Karnataka Bank has demonstrated its commitment to technology and innovation by deploying modern information technology and launching products like the FINACLE platform in collaboration with Infosys Technologies. The bank’s technology-driven approach extends to services like internet banking, mobile banking, and even facilitating online booking of Indian Railway tickets through its platform.
In the financial arena, Karnataka Bank has consistently posted impressive results, including crossing the Rs. 1000 crore mark in deposits, achieving a business turnover of Rs. 25,000 crore, and even being recognized among the top banks by KPMG surveys.
Notably, the bank has ventured into partnerships for mutual funds, insurance, and more, providing a comprehensive financial ecosystem to its customers. It has also won several awards for its digital initiatives, customer service, and contributions to the banking industry. Overall, Karnataka Bank’s journey over the years showcases its commitment to customer-centric banking and its drive to embrace technology and innovation.
Karnataka Bank Q1 FY2024 Results: Summary and Key Points
- Karnataka Bank Limited’s consolidated net profit for Q1 FY2024 rose to Rs. 370.73 crores, indicating substantial growth compared to the preceding quarter.
- During the same period, the company reported a total income of Rs. 2282.59 crores, slightly lower than the previous quarter’s figure of Rs. 2364.54 crores.
- The company’s earnings per share (EPS) for Q1 FY2024 stood at Rs. 11.80, showcasing an improvement from Rs. 11.26 recorded in the previous quarter.
- In terms of asset quality, Karnataka Bank reported a decrease in both Gross and Net NPAs. The Gross NPA was at ₹ 2315.88 crores in Q1 FY2024 compared to ₹ 2401.39 crores in Q1 FY2023.
- The Return on Average Assets (RoA) for Q1 FY2024 increased to 1.47%, marking a positive trend from the previous quarter and year.
Karnataka Bank in Recent News
- Karnataka Bank plans to generate Rs 1,500 crore through a share offering. (23rd September, 2023)
- P Jayaram Bhat, a prominent personality within the banking sphere, and the former chairman of Karnataka Bank, passed away on Wednesday, August 9. With a career spanning three decades, Bhat established himself as a respected and influential figure in the banking industry.
- After a brief stint as a lecturer for three months, P Jayarama Bhat joined Karnataka Bank as a Probationary Officer in January 1973.
- During the initial quarter of the present fiscal year, Karnataka Bank recorded a net profit of Rs 370.70 crore, marking a significant increase from the previous figure of Rs 114.18 crore.
To buy Karnataka Bank shares in India, you can use the services of various stockbrokers or financial institutions such as:
- Zerodha
- ICICI Direct
- HDFC Securities
- Sharekhan
- Kotak Securities
- Angel Broking
- Axis Direct
- Motilal Oswal
- 5Paisa
- Edelweiss
Let’s examine the statistics regarding the projected share price target for the period between 2023 and 2025, after conducting a thorough review of the company.
| When | Maximum Price | Minimum Price |
| September 2023 | ₹247.99 | ₹209.99 |
| October 2023 | ₹249.27 | ₹203.88 |
| November 2023 | ₹254.75 | ₹207.96 |
| December 2023 | ₹255.61 | ₹214.19 |
Throughout the year 2023, Karnataka Bank’s share price has showcased a pattern of fluctuation, echoing the dynamic nature of financial markets. The price trajectory, as reflected in the data, portrays a range of highs and lows.
Karnataka Bank year to date has given more than 57.74% as of 24th September, 2023, currently trading at Rs.242 with a market cap of Rs. 7,561 Crore.
For the month of October, 2023, Karnataka bank is expected to trade in between ₹249.27 and ₹203.88.
Book value of Karnataka bank is Rs. 263.
| When | Maximum Price | Minimum Price |
| January 2024 | ₹268.01 | ₹215.66 |
| February 2024 | ₹269.58 | ₹234.42 |
| March 2024 | ₹272.30 | ₹236.79 |
| April 2024 | ₹247.55 | ₹215.26 |
| May 2024 | ₹206.29 | ₹179.38 |
| June 2024 | ₹247.55 | ₹215.26 |
| July 2024 | ₹210.42 | ₹182.97 |
| August 2024 | ₹231.46 | ₹201.27 |
| September 2024 | ₹243.03 | ₹211.33 |
| October 2024 | ₹285.92 | ₹248.62 |
| November 2024 | ₹300.21 | ₹261.06 |
| December 2024 | ₹306.22 | ₹266.28 |
Throughout the course of 2024, Karnataka Bank’s share price demonstrated noteworthy variations in value, reflecting the inherent volatility of the financial landscape. The year commenced with a Maximum Price of ₹268.01 in January and achieved its highest point in December at ₹306.22.
Correspondingly, the Minimum Price began at ₹215.66 in January and gradually increased to ₹266.28 in December. This consistent upward trend in the Minimum Price indicates a potential underlying support level for the share value. These movements may be attributed to a myriad of influences, including shifts in market sentiment, economic indicators, and the bank’s performance metrics. As the share price charted its course through the months, it provided investors and analysts with compelling data to gauge future trends and formulate projections for Karnataka Bank’s share price trajectory in 2024.
| When | Maximum Price | Minimum Price |
| January 2025 | ₹312.34 | ₹240.26 |
| February 2025 | ₹328.78 | ₹252.91 |
| March 2025 | ₹345.22 | ₹265.55 |
| April 2025 | ₹308.23 | ₹237.10 |
| May 2025 | ₹280.21 | ₹215.55 |
| June 2025 | ₹308.23 | ₹237.10 |
| July 2025 | ₹293.56 | ₹225.81 |
| August 2025 | ₹305.79 | ₹235.22 |
| September 2025 | ₹321.08 | ₹246.98 |
| October 2025 | ₹340.34 | ₹261.80 |
| November 2025 | ₹364.16 | ₹280.13 |
| December 2025 | ₹371.45 | ₹285.73 |
Throughout the year 2025, Karnataka Bank’s share price experienced notable shifts in value, revealing the dynamic nature of the financial markets. Commencing with a Maximum Price of ₹312.34 in January, the share price journeyed through various peaks and valleys, culminating in December with a Maximum Price of ₹371.45. Conversely, the Minimum Price embarked on a parallel trajectory, commencing at ₹240.26 in January and ascending to ₹285.73 by December.
This consistent upward movement in the Minimum Price hints at a potential support level for the share’s valuation. These price shifts could be attributed to a myriad of factors, including market sentiment, economic indicators, and the bank’s operational performance. As the year unfolded, investors and analysts were presented with valuable insights to decipher potential trends and formulate projections for Karnataka Bank’s share price outlook in the year 2025.
| Year | Maximum Price | Minimum Price |
| 2026 | ₹427.17 | ₹299.02 |
| 2027 | ₹363.09 | ₹254.16 |
| 2028 | ₹653.56 | ₹457.49 |
| 2029 | ₹1,437.84 | ₹1,006.49 |
| 2030 | ₹1,495.08 | ₹1,046.56 |
Over the five-year span from 2026 to 2030, Karnataka Bank’s share price exhibited an intriguing trajectory, reflecting a blend of market dynamics and the bank’s own strategic undertakings. Starting from a Maximum Price of ₹427.17 in 2026, the share price demonstrated a notable range, reaching its highest point at ₹1,495.08 in 2030.
Similarly, the Minimum Price showcased a steady increase from ₹299.02 in 2026 to ₹1,046.56 in 2030. This upward movement suggests the establishment of a solid base for the share’s valuation. These price developments could be attributed to a multitude of factors, including shifts in economic indicators, evolving market sentiment, and the bank’s performance metrics.
Throughout this timeframe, investors and analysts had the opportunity to closely monitor these trends and craft potential projections for Karnataka Bank’s share price, providing a foundation for discussions about its price target within the context of the years 2026 to 2030.
Karnataka Bank Financial Condition (Last 5 Years)
| Year | 2019 | 2020 | 2021 | 2022 | 2023 |
| Revenue (Crore Rs) |
5,906 | 6,475 | 6,232 | 6,222 | 7,220 |
| Interest (Crore Rs) |
4,001 | 4,444 | 4,049 | 3,731 | 4,035 |
| Expenses + (Crore Rs) |
2,245 | 2,706 | 2,902 | 2,677 | 2,650 |
| Financing Profit (Crore Rs) |
-340 | -676 | -719 | -186 | 535 |
| Financing Margin % | -6% | -10% | -12% | -3% | 7% |
| Other Income + (Crore Rs) |
1,002 | 1,262 | 1,404 | 954 | 993 |
| Depreciation (Crore Rs) |
54 | 64 | 74 | 74 | 86 |
| Profit before tax (Crore Rs) |
608 | 522 | 612 | 695 | 1,441 |
| Tax % | 21% | 21% | 27% | 18% | 18% |
| Net Profit + (Crore Rs) |
477 | 432 | 483 | 509 | 1,180 |
| EPS in Rs | 15.35 | 13.89 | 15.52 | 16.35 | 37.81 |
| Dividend Payout % | 21% | 0% | 12% | 24% | 13% |
Over the past five years, Karnataka Bank has displayed varying financial trends. From 2019 to 2023, the bank’s revenue steadily increased, reaching 7,220 in 2023, showcasing its ability to generate income. However, its interest expenses also showed a consistent rise, indicating potential challenges in managing borrowing costs. Despite efforts to manage expenses, there were fluctuations in other operational costs, which impacted the bank’s overall profitability.The bank’s financing profit fluctuated significantly, with periods of negative growth followed by a notable rebound in 2023. This dynamic could reflect the bank’s efforts to adapt to changing market conditions and optimize its financing activities. A positive development is the increasing financing margin percentage, which signifies improved efficiency in generating profits from financing operations, potentially resulting from strategic adjustments.
The bank’s ability to generate other income remained relatively stable, though it experienced a dip in 2022. The consistent presence of other income indicates a diverse revenue stream that could be contributing to the bank’s overall financial stability. Depreciation expenses showed a gradual increase, which could be attributed to the bank’s investment in infrastructure or technology.
Profit before tax demonstrated fluctuations, with a significant surge in 2023, suggesting the bank’s efforts to enhance its pre-tax profitability. While the tax percentage remained relatively consistent, the bank managed to increase its net profit, with a substantial leap in 2023. This remarkable growth in net profit, coupled with an impressive rise in earnings per share (EPS), signifies a potentially positive outlook for the bank’s shareholders.Despite these positive indicators, the dividend payout percentage experienced volatility, particularly with a dramatic drop to 0% in 2020. However, this was followed by a recovery in subsequent years. In summary, Karnataka Bank’s financial condition over the last five years reflects a mix of challenges and improvements, demonstrating the bank’s adaptability in navigating market dynamics and working towards sustained growth and stability.
Axis Securities has a target price of Rs 250 for the stock.
Also read:
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- Yes Bank Share Price Target 2023, 2024, 2025 to 2030: Can Yes Bank’s Share Price Hit 100INR?
FAQs
Based on our analysis, the Maximum Price for Karnataka Bank’s shares in 2030 is ₹1,495.08, while the Minimum Price is ₹1,046.56. Therefore, the share price target for Karnataka Bank by the end of 2030 falls within this range.
Karnataka Bank’s Maximum Price in December 2025 is ₹371.45, and the Minimum Price is ₹285.73. These figures offer insight into a possible range for the share price target as the year 2025 draws to a close.
Is it worthwhile to invest in Karnataka Bank for the long term?
The analysis exhibits a consistent upward trend in the share prices of Karnataka Bank from 2023 to 2025, suggesting the potential for growth. Investors seeking long-term prospects may find the bank’s performance encouraging, but it’s important to conduct thorough research and consider various factors before making investment decisions.
Will the Karnataka Bank stock grow?
The analysis points to a progressive rise in Karnataka Bank’s share prices over the years, indicating growth potential. However, stock market outcomes are influenced by numerous factors, including economic conditions, industry trends, and company performance. It’s advised to consult financial experts and carry out due diligence before making investment choices.
Will it reach ₹250 INR by 2025?
The data does not show a Maximum Price of ₹100 INR for Karnataka Bank’s shares by 2025. In fact, the Minimum Prices for the years 2023 to 2025 are well above ₹250 INR, suggesting that the share price is not projected to dip to that level within the provided analysis.
Conclusion
Karnataka Bank is one of the small cap banks that turned financially profitable in the financial year of March 2023 and since then have been posting profitable numbers. This bank has been posting 40% compounded profit growth in the last 3 years and 29% in the last 5 years. Karnataka bank has been trading at 0.92 times of its book value, indicating the stock is undervalued, even after recent run.
Current PE of Karnataka bank is 5.26 whereas median PE of the last 5 years is 4.6. In my opinion Karnataka bank will be undervalued until PE stands below 10.
Karnataka bank has reduced its net NPA to 1.43% which was 3% during June 2021. Bank’s compounded revenue growth in the last 3 years has been just 4%, which is a concern, and bank needs to grow at a faster pace.
Disclaimer: At the time of writing this article, my family members do hold Karnataka bank shares. However, this is not an investment recommendation. Please connect with a SEBI registered financial advisor before investing in Karnataka bank shares.
What did we learn?
- 1 About Karnataka Bank
- 2 Karnataka Bank Q1 FY2024 Results: Summary and Key Points
- 3 Karnataka Bank in Recent News
- 4 How to Buy Karnataka Bank Shares in India?
- 5 Karnataka Bank Share Price Target 2023 to 2025
- 6 Karnataka Bank Financial Condition (Last 5 Years)
- 7 Karnataka Bank Share Price Target by Brokerage Firms and Experts
- 8 FAQs
- 9 Conclusion
