Karnataka Bank Q3FY19: Asset quality stable but provisions remained elevated; Buy

Rudra Shares And Stock Brokers | Feb. 25, 2019, 11:36 a.m.

Outlook and Valuation

As per the bank, slow growth of NBFCs is likely to continue and in a way, is proving to be positive for the banking industry. Further, in terms of the credit growth, for the bank as well as the industry, MSME sector is likely to be the growth engine going forward .

Loan book is improving both quantitatively and qualitatively as evidenced from improved CD Ra-tio, decreasing slippage ratio, declined GNPA & NNPA ratios, improved operational profit and im-proved NII. With sustained credit growth, improved earnings, declining stress in book and CASA target of 29% are positives , bank should be able to wither provision pressure and fur- ther consolidate its position in the ensuing quarter. Therefore, we recommend to BUY with initial target of ` 135 giving an upside potential of 15%.

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