1.At a Glance
Karnataka Bank Ltd, the Mangaluru-based veteran of India’s private banking scene, just dropped itsQ2FY26numbers – and boy, it’s been a quarter of calm profits and chaotic management changes.The stock trades around₹181, about22% below its 52-week high of ₹231, while themarket capsits at a modest₹6,842 crore. For a bank that’s older than most fintech founders’ grandfathers, it’s still fighting its battles.
InQ2FY26, the bank posted anet profit of ₹319 crore, up9% QoQ, but still 2% below Q1 in sales at ₹2,179 crore. TheNet Interest Margin (NIM)held at a healthy3.6%, whileGross NPAeased to3.46%andNet NPAstood at1.44%– a relief considering how some small private banks still treat NPAs like family members.
Thebook value per shareis ₹333, yet the stock trades at just0.54x book. It’s practically a discount bazaar for value hunters.With aP/E of 5.96, anROE of 11.1%, and adividend yield of 2.76%, Karnataka Bank looks like that frugal uncle who still makes money on a fixed deposit while everyone else is chasing crypto.
2.Introduction
If Karnataka Bank were a person, it’d be that serious, conservative relative from the Konkan coast — old-school, disciplined, but occasionally dramatic. Over a century old, it has seen colonial regimes, multiple economic reforms, and now, Gen Z clients who think UPI is banking.
In Q2FY26, this coastal warrior deliveredsteady profits despite musical chairs in management– with CFOs, COOs, and Treasury heads resigning faster than a cricket captain under BCCI pressure. Yet, the bank continued its “work hard, pray harder” routine.
Over the years, Karnataka Bank has carved its niche as amid-sized private sector bankwith904 branchesand1,482 ATMs, mainly across southern India. It thrives on retail, MSME, and agricultural loans — basically funding everything from your neighborhood kirana store to your cousin’s dream of owning a Mahindra tractor.
Sure, growth is modest, but stability is the name of the game. In the wild world of fintech disruptions, this old-school banker still earns, lends, and smiles — occasionally topping it off with a ₹5 dividend to remind shareholders that tradition still pays.
3.Business Model – WTF Do They Even Do?
Karnataka Bank is the kind of financial institution that does everything your neighborhood bank does — just with fewer headlines and more compliance.
Three Pillars of its Banking Empire:
- Retail Banking:Home loans, car loans, gold loans, education loans, personal loans – basically, if it can be pledged or mortgaged, KBL has a product for it. With retail now forming47.5% of advances, it’s clearly their favorite child.
- MSME & Corporate Banking:The bank lends to small and mid-corporates through working capital and term loans. Themid-corporate sharestood at26.5%, whilelarge corporatescrept up to26%, hinting at a cautious shift toward bigger balance sheets and better-rated clients.
- Agricultural Banking:The agri portfolio includes farm loans, mechanization, and rural development funding — think tractors, drip irrigation, and every other dream under the Indian sun that starts with “loan sanctioned by Karnataka Bank.”
Add to that, apara-banking and insurance cross-sellplay through tie-ups withPNB MetLife, LIC, Bharti AXA (life)andUniversal Sompo & Bajaj Allianz (general)— meaning the bank sells everything from loans to life insurance to “no-claim” policies.
Their newcollaboration with Fisdomfor3-in-1 trading accounts(savings + demat + trading) is their way of saying,
“Hey fintech bros, we can swipe right on digital too.”
4.Financials Overview
| Metric | Q2FY26 (₹ Cr) | Q2FY25 (₹ Cr) | Q1FY26 (₹ Cr) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 2,179 | 2,243 | 2,261 | -2.8% | -3.6% |
| PAT | 319 | 284 | 292 | 12.3% | 9.1% |
| EPS (₹) | 8.44 | 7.50 | 7.74 | 12.5% | 9.0% |
Annualised EPS:8.44 × 4 = ₹33.76At CMP ₹181,P/E = 5.36, which is lower than your friend’s sense of humor after his portfolio correction.
🗣Commentary:The numbers whisper “steady”, not “spectacular.” NII was flat, other income stable, and provisioning kept in check. Margins held strong despite rising cost of funds — clearly, someone in Mangalore knows how to juggle spread management better than most NBFCs.
5.Valuation Discussion – Fair Value Range Only
Let’s try valuing this Konkan classic using three textbook methods:
A. P/E Method:EPS (TTM): ₹30.4Industry P/E: 14.6KBL P/E: 5.96Even if we give it a humble re-rating to 8–10x (given stable NPAs & 3.6% NIM),👉Fair Value = ₹243 – ₹304 per share.
B. EV/EBITDA Method:EV = ₹1,05,966 CrEBITDA (FY25): ~₹7,034 CrEV/EBITDA = 15.0×Peers trade between 12×–18× → So fair range roughly matches ₹230 – ₹280.
C. DCF (Conservative Assumption):Assume profit CAGR of 8% for 5 years, COE 13%, terminal growth 4%.👉 DCF fair range: ₹210 – ₹260.
🧾 Fair Value Range (Educational Only): ₹210 – ₹290(This is for educational purposes only and is not investment advice. Your risk appetite is your business, not ours.)
6.What’s Cooking – News, Triggers, Drama
Forget suspense thrillers; Karnataka Bank’s boardroom had its own cinematic quarter.
- Leadership Shuffle:FromCOO appointments(Mr. Raja B.S) toCFO exits (Abhishek Bagchi out, Vijayakumar in)toTreasury Head resignations, the HR department had its busiest quarter since demonetization.
- CEO Extension:RBI gave MD & CEORaghavendra Srinivas Bhata one-month extension in October 2025. That’s shorter than most Netflix subscription trials.
- AGM Highlights:The101st AGMapproved a₹5/share dividend, appointment of R.S. Bhat as permanent CEO, and amendments to Articles of Association – all passed like routine scripts in a long-running soap opera.
- Fisdom Collaboration:Launch of
