scorecardresearchKarnataka bank shares rallied 20% to hit a 3-year high after Q2 profit shot up

Karnataka bank shares rallied 20% to hit a 3-year high after Q2 profit shot up

Updated: 02 Nov 2022, 12:47 PM IST
TL;DR.
On Tuesday, the bank reported its highest ever-net profit at Rs. 411.63 crore in Q2FY23, up by 227% from Rs.125.61 crore in the corresponding quarter of the last fiscal. The bank's asset quality improved as its gross non-performing assets declined to 3.36% in the September quarter from 4.52%.
The capital adequacy ratio of the bank stood at 15.28% in Q2 against 14.48 per cent in the corresponding period of the previous fiscal.

The capital adequacy ratio of the bank stood at 15.28% in Q2 against 14.48 per cent in the corresponding period of the previous fiscal.

Shares of Karnataka Bank opened strongly in Wednesday's trade after the bank reported its highest-ever net profit in Q2FY23. The stock opened with a huge gap up of 13.10, or 13.95%, at 107, and it maintained the same momentum to hit an intra-day high of 112.65, up Rs.18.75, or 20%, against the previous close of Rs.93.90, and it freezes in the upper circuit.

The stock started its upward trend after hitting a 52-week low of Rs. 55.45 in March. Since then, it has doubled investors' wealth by rising 103%, and at the current moment, it is trading at a three-year high. On the technical charts, the stock is trading 63.73% above its 200-day moving average.

At the current market price of Rs. 112.65, the bank's PE ratio stands at 4.37x, which is significantly lower than the sector's PE ratio of 29.40x.

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Stock price chart of Karnataka Bank.

On Tuesday, the bank reported its highest ever-net profit at Rs. 411.63 crore in Q2FY23, up by 227% from Rs.125.61 crore in the corresponding quarter of the last fiscal.

The bank's net interest income grew by 26% to 802.73 crore during the quarter, from 637.10 crore in the year-ago period. The net interest margin (NIM) of the bank rose to 3.56% during Q2, compared to 3.15% in the September 2021 quarter.

The bank's asset quality improved as its gross non-performing assets declined to 3.36% in the September quarter from 4.52% in Q2FY22 and net NPAs reduced to 1.72% in Q2FY23 compared to 2.85% in the same quarter of last fiscal.

In addition to that, the capital adequacy ratio of the bank stood at 15.28% in Q2 against 14.48 per cent in the corresponding period of the previous fiscal.

The share of CASA (current account and savings account) deposits in Karnataka Bank stood at 32.82% of all deposits during the second quarter of 2022-23. The share of CASA was 30.88 per cent during the second quarter of 2021-22, said Mahabaleshwara MS, MD and Chief Executive Officer of the Bank.

The core deposits of the bank stood at Rs.81,628.97 crore during Q2 2022-23. Gross advances grew at a satisfactory rate of 10.09 per cent during the quarter, he said.

Meanwhile, the bank saw its FII holdings rise to 18.2% in the second quarter of FY23 from 9.1% in Q2FY22, an increase of about 9.1%. Regular shareholders hold the majority stake in the company, with 76.5%. DIIs hold 12.1% of the stake in the bank.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 02 Nov 2022, 12:47 PM IST