Karnataka Bank hits all 3 targets set by Zee Business in 9 weeks; gives double returns to investors – check analyst's views

Karnataka Bank has achieved all three targets set by Zee Business and given double returns to the investors within nine weeks of being recommended. The stock of the mid-cap private lender was rated as 'Buy' by Zee Business Managing Editor Anil Singhvi in a special show on Navratna SIP stocks.

Citing its strong fundamentals and huge upside potential, Singhvi had given three targets of Rs 115, Rs 140, and Rs 165 per share at the time of Navratri on October 4, 2022. He was bullish on the overall banking sector and had recommended Karnataka Bank stock for stellar gains.

Almost after nine weeks, the counter on Wednesday - December 14, 2022, touched a fresh 52-week high of Rs 168.5 per share on the BSE intraday, after surging over 2.5 per cent. The scrip saw profit booking at the end of the session and slipped in trade to close flat at Rs 163.15 apiece today.

कर्नाटक बैंक में सिर्फ 9 हफ्तों में दोगुना रिटर्न

हमने कहा कर्नाटक बैंक में बने रहो तीनों टार्गेट हासिल

सटीक रही अनिल सिंघवी की #karnatakabank में निवेश की राय...

सही रिसर्च, सटीक एनालिसिस और कमाई की परफेक्ट स्ट्रैटेजी

सिर्फ #ZeeBusiness पर...@AnilSinghvi_ #TargetHit pic.twitter.com/xSa3Q0IVX9

— Zee Business (@ZeeBusiness) December 14, 2022

Zee Business had advised investors to stay put in Karnataka Bank after the first two targets were achieved. 

Karnataka Bank reported a stellar performance in the July-September quarter of the financial year 2022-23 (Q2FY23), beating Street’s expectations across all fronts. The private lender had registered its highest-ever profit after tax (PAT) of Rs 412 crore for the quarter of any financial year in its history.

Similarly, the bank’s asset quality improved with Gross/Net non-performing assets (NPAs) at 3.36/1.72 per cent from 4/2.2 per cent, respectively, quarter-on-quarter. While its slippage ratio stood at 1.57 per cent versus 1.72 per cent year-on-year (YoY) in Q2FY22.

"The management commentary on the expectation of robust loan growth with a strong credit pipeline, sustaining net interest margin (NIM) at 3.5 per cent, and continuous improvement in the asset quality has been encouraging," Sumit Rathi, Research Analyst, Axis Securities said in a note on the bank.

With improving asset quality and the management’s guidance for further improvement in gross/net NPA, NIMs, slippages, and an overall 15 per cent growth in loan book, the analyst believes the bank commands re-rating and better valuation.