Karnataka Bank: 0.54× Book Value & the ‘Discount Store’ of Private Banking

1. At a Glance

Karnataka Bank is the seasoned, no-frills uncle of India’s private banking family — around since 1924, stubbornly independent, and still headquartered in Mangalore while everyone else moved to Mumbai. It offers everything from housing loans to farm finance to corporate lending, but the market values it at barely half its book value (₹320 book vs. ₹172 CMP). That’s a bigger discount than a Diwali sale gone wrong. P/E? 5.1. Dividend yield? 3.19%. Growth in profits over the last five years? A respectable 24% CAGR. Yet, investors are hesitant — because, well… history and NPAs have a long memory.

2. Introduction

In a market where new-age fintechs are burning VC cash to “redefine banking”, Karnataka Bank is content doing things the old-school way — collecting deposits, lending, keeping NPAs in check, and occasionally making headlines for management reshuffles. It’s survived competition from big boys like HDFC, ICICI, and Kotak, but hasn’t quite broken into the high-valuation club.

Its strengths? Strong capital adequacy, improving asset quality (gross NPA down to 3.08%), and an ROE that’s not embarrassing at 11.1%. Weaknesses? Low growth in advances and a stock price chart that hasn’t been fun since 2023.

3. Business Model (WTF Do They Even Do?)

Karnataka Bank is a full-service private sector