Shares of Karnataka Bank have maintained their bullish momentum after reporting all-time high profit during the second quarter or Q2 FY23 of the current financial year. The private bank stock has delivered multibagger returns in 2022 (YTD) by rallying nearly 110% during the period so far.
“While the growth in the bank’s asset quality is encouraging, concerns remain regarding the high restructuring (~6.2%) and expected increase in cost of funds. However, in Q2FY23 the bank reported highest ever PAT in a quarter and highest ever PAT in the first half of the financial year,” said domestic brokerage and research firm Axis Securities.
With overall loan growth expected at 15%, management’s guidance for improving asset quality and further improvement in G/NNPAs and slippages, and NIM being maintained at 3.5%, the brokerage believes That Karnataka Bank orders re-rating and better valuation.
Sharing as its top stock pick for the week, the brokerage house recommends a Buy rating Karnataka Bank Shares with a target value of 148 One Piece. Incorporated in 1924, Karnataka Bank Limited (KBL) – is a scheduled commercial bank under private sector.
“Additionally, the management’s commentary on maintaining ROA at 1% and achieving a sustainable ROE at +14% is quite encouraging. However, we will be closely monitoring the company’s performance to see if it continues to achieve the guided performance. Against this backdrop, we should look at an upside from here with further improvement in the company’s overall performance in the coming quarters.”
According to Axis Securities, the bank is well capitalized with Tier 1 capital at 15.3% in Q2 FY2013 with CAR at 12.3%, creating ample room to support strong growth momentum for FY2013 Used to be.
“The management expects CASA to reach a minimum of 35% by March 23 and further increase it to 38-40% over the next few years. Management’s focus is on increasing the CASA ratio, as well as retail TD in lending mix, to the bank This will help bring down the cost of funds which should be positive for the stability of NIM as well as the strong growth momentum in advances,” it added.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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