Karnataka Bank (KTKBANK)

FairStock Score: 51/100 — MIXED

Score breakdown: P/E: 3/3 · ROCE: 0/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• Trades at a P/B of 0.83, below book value of ₹296.65, providing a margin of safety.
• Low P/E of 6.64 with latest quarter net profit of ₹291 Cr on sales of ₹2,220 Cr, implying a healthy quarterly margin.
• Piotroski F-Score of 6/9 suggests reasonably sound financial health.
• Dividend yield of 2.46% offers some income while waiting for re-rating.
• Profit growth of 2.54% came despite a -1.02% sales decline, indicating some operating resilience.

Concerns

• Zero promoter holding raises serious governance and owner-alignment questions.
• Negative sales growth of -1.02% and modest profit growth of 2.54% make the PEG of 2.61 look unattractive.
• ROE of 10.00% and ROCE of 6.33% show only mediocre capital efficiency.
• FairStock Score of 39/100 is mixed, offering no strong fundamental confirmation.

AI Analysis

At ₹244.90, Karnataka Bank is being offered below its book value of ₹296.65 — a P/B of 0.83. Graham taught me to respect a margin of safety, and buying a bank at 83 paise to the rupee of net worth provides that, provided the asset quality holds up. The P/E of 6.64 is certainly modest. But cheapness is not enough. The bank's return on equity is 10.00%, acceptable but not extraordinary, and ROCE of 6.33% tells me capital is not deployed with exceptional efficiency. Top-line has slipped -1.02%, yet profit grew 2.54%, suggesting cost control or lower provisions helped. The latest quarter shows net profit ₹291 Cr on sales ₹2,220 Cr, a healthy margin. Dividend yield of 2.46% is a small comfort. I do not see a wide moat. Banking is a competitive commodity business, and with 0.00% promoter holding, I have to ask who is truly minding the store. No owner-operator is a serious governance flag. The Piotroski F-score of 6/9 is decent, but the FairStock Score of 39/100 doesn't make it a screaming buy. The PEG of 2.61 is rich relative to the 2.54% profit growth — the market is not paying much, but the growth is also not there. This is not a wonderful business. It is a possible asset play, if book value is trustworthy and the franchise can generate better returns over time. I would want to see improving ROE and positive sales growth before making a large commitment. At the right price, it may be a slow compounding asset, but I need evidence.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer