Buy Karnataka Bank; target of Rs 85: Anand Rathi

Anand Rathi’s research report on Karnataka Bank

Lower treasury income and higher opex (one-time superannuation expense) led to a ~13% sequential decline in operating profit for Karnataka Bank. With the standstill on NPA recognition, asset quality and PCR improved.

Outlook

With the expected pick-up in earnings in FY22 and limited downside from current levels, we maintain a Buy, at a TP of Rs 85 valuing it at 0.3x P/ABV on its FY23e book.