Karnataka Bank: A South-Based Private Sector Bank with a Strong Retail, MSME, and Agri Focus

Karnataka Bank is a south-based private sector bank incorporated in 1924. It has a large presence in the state of Karnataka, with ~46% of its branches in rural and semi-urban areas. The bank focuses on the retail, MSME, and agri segments, with a share of agri/MSME at ~37.4% of advances. It has a pan-India presence with 901 branches, of which 575 are in Karnataka. The bank has a large customer base of 1.3 crore and an employee strength of 8,652.

Outlook

At the current market price (CMP), the stock is trading at 0.7x FY25E ABV, which seems relatively lower. Assigning a multiple of ~0.9x FY25E ABV, the target price for the stock is ₹285 per share, with a BUY rating.

Key takeaways:

• Karnataka Bank is a south-based private sector bank with a large presence in Karnataka.
• The bank focuses on the retail, MSME, and agri segments.
• The bank has a pan-India presence with 901 branches and a large customer base of 1.3 crore.
• The stock is trading at a relatively lower valuation and has a potential upside of 28% from the current market price.

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