Karnataka Bank Ltd. (KTKBANK) AI Stock Analysis

• Market Cap: ₹68.82B
• Dividend Yield: 2.42%
• Average Volume (3M): 65.77K
• Price to Earnings (P/E): 6.0
• Beta (1Y): 1.18
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: IN
• Employees: 8,900
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): N/A
• Shares Outstanding: 378,145,940
• 10 Day Avg. Volume: 57,471
• 30 Day Avg. Volume: 65,774
• PEG Ratio: -0.35
• Price to Book (P/B): 0.56
• Price to Sales (P/S): 0.66
• P/FCF Ratio: -1.01
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: ₹197.00 ▼(-1.52% Downside)

The score is driven primarily by solid FY2025 profitability and a conservatively positioned balance sheet, but it is held back by the very large FY2025 negative operating/free cash flow and cash-flow volatility. Attractive valuation (low P/E with a dividend) supports the rating, while technical signals are mixed and largely neutral.

Positive Factors

Strong FY2025 revenue and net income growth

A ~51% revenue rise to 102.8B with net income up to 12.7B signals meaningful scale expansion and improved operating leverage. If sustained, this underpins capacity for loan growth, reinvestment in distribution/digital channels, and strengthening core earnings over the medium term.

Conservatively positioned balance sheet

Low reported debt-to-equity (~0.16) and rising equity provide a capital buffer that supports underwriting and absorbs shocks. A conservative capital structure enhances resilience, reduces refinancing pressure, and gives optionality to fund measured growth without heavy reliance on costly wholesale borrowing.

Diversified retail and fee-based business mix

A multi-pronged franchise across retail, MSME, agriculture and corporate lending plus fee-based services diversifies revenue and credit risk. Structural diversification helps stabilize margins and earnings over business cycles and supports cross-selling via branch and digital channels.

Negative Factors

Very weak operating and free cash flow in FY2025

Deep negative operating and free cash flow in FY2025 signal poor cash conversion and elevated volatility. Over months, weak cash generation can constrain internal funding for loans, capex, or dividends and increase dependence on deposit or wholesale funding, raising structural liquidity risk.

Inconsistent profitability across prior years

Although FY2025 margins improved, prior year inconsistency and anomalous margin readings reduce confidence in profit durability. Structural unpredictability complicates forecasting, may reflect cyclical credit mix or one-offs, and makes sustained ROE and margin targets harder to rely on.

Year-to-year leverage variability

Marked swings in leverage imply the bank’s capital and funding mix can change materially between periods. Persistent variability increases funding and regulatory capital risk, may force reactive capital measures in downturns, and can limit consistent lending capacity over time.

Karnataka Bank Ltd. Business Overview & Revenue Model

Company Description

The Karnataka Bank Limited provides personal and business banking products and services in India. It operates through four segments: Treasury Operations, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations. The company offers savings and current accounts; fixed, cash certificate, and recurring deposits; and non-resident rupee, ordinary non-resident, foreign currency, and resident foreign currency accounts, as well as non-resident Indian priority banking services. It also provides loan products, including vehicle, home, education, personal, MSME, mortgage, women entrepreneur, gold, and other loans, as well as loans against property. In addition, the company offers debit, credit, gift, deposit only, and image cards; life, general, and health insurance products; investment products; remittance and other services; and forex services comprising pre and post-shipment, export collection bills, export LC advising, inward remittance facility, import letter of credit, import bill collection, buyer's credit, and outward remittances. Further, it provides point of sale service for merchant's payment solutions; and KBL e-COLLECT, a fee payment processing platform, which enables the institution to offer parents and students a way to pay their fees through a range of payment options. Additionally, the company offers various loans for agriculture; and other services, such as internet and mobile banking, mutual funds, demat and online trading services, locker facility, and funds transfer services. As of March 31, 2022, it operated through a network of 877 branches, 885 ATMs and 563 cash recyclers. The company was incorporated in 1924 and is headquartered in Mangalore, India.

How the Company Makes Money

Karnataka Bank Ltd. Financial Statement Overview

Summary

Strong FY2025 revenue growth (~51%) and higher net income support profitability, and the FY2025 balance sheet shows low leverage (debt-to-equity ~0.16) with acceptable ROE. However, the very weak FY2025 cash profile (operating cash flow -65.4B; free cash flow -67.0B) and high cash-flow volatility materially reduce earnings quality.

Income Statement

Profitability and scale improved meaningfully: revenue rose to 102.8B in FY2025 (annual report, reportTypeId=2) with a very strong ~51% growth rate versus FY2024, and net income increased to 12.7B. Margins in the most recent year are solid (net margin ~12%, EBIT margin ~16%). Offsetting this, profitability metrics across earlier years look inconsistent (including unusual margin readings and some years where operating profitability appears weaker), which reduces confidence in stability of the trend.

Balance Sheet

Balance sheet looks conservatively positioned for the latest period: debt is low relative to equity (debt-to-equity ~0.16 in FY2025) and equity increased to 120.8B alongside growth in total assets to 1.21T. Returns on equity are steady-to-good for a regional bank context (~10–14% range across the periods shown). The main watch-out is variability in leverage over time (debt-to-equity notably higher in FY2024 versus FY2025), suggesting capital structure can shift year to year.

Cash Flow

Cash generation is the weakest area: FY2025 shows sharply negative operating cash flow (-65.4B) and negative free cash flow (-67.0B), with free cash flow also deteriorating versus the prior year (growth -30.3). While cash flow can be volatile for banks due to working-capital and balance-sheet movements, the magnitude of the FY2025 outflow versus positive cash flow in FY2024 and FY2023 points to elevated volatility and lower near-term cash conversion reliability.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	103.46B	102.83B	96.17B	82.13B	71.66B	76.39B
Gross Profit	45.12B	45.80B	46.26B	41.78B	34.36B	35.89B
EBITDA	14.79B	17.26B	0.00	15.27B	7.68B	5.56B
Net Income	11.65B	12.73B	13.07B	11.80B	5.08B	4.82B
Balance Sheet
Total Assets	0.00	1.21T	1.16T	990.58B	920.40B	855.81B
Cash, Cash Equivalents and Short-Term Investments	0.00	79.84B	79.93B	116.16B	44.37B	53.16B
Total Debt	0.00	19.41B	44.48B	15.63B	14.64B	17.79B
Total Liabilities	-120.85B	1.09T	1.05T	908.45B	849.46B	789.39B
Stockholders Equity	120.85B	120.85B	108.48B	82.13B	70.94B	66.42B
Cash Flow
Free Cash Flow	0.00	-67.03B	5.69B	17.41B	-5.24B	32.81B
Operating Cash Flow	0.00	-65.40B	6.81B	18.30B	-4.67B	33.68B
Investing Cash Flow	0.00	-6.91B	-1.11B	-875.20M	-564.34M	-874.12M
Financing Cash Flow	0.00	71.61B	122.72B	-194.60M	-3.55B	-8.85B

Karnataka Bank Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TMB	79 Outperform	₹96.41B	7.94	―	2.15%	7.08%	7.69%
SOUTHBANK	77 Outperform	₹98.35B	7.07	―	1.05%	8.09%	2.68%
J&KBANK	75 Outperform	₹115.35B	5.38	―	1.03%	9.52%	1.91%
KTKBANK	70 Outperform	₹68.82B	5.99	―	2.42%	―	―
FEDFINA	70 Outperform	₹57.09B	18.11	―	―	14.44%	-10.84%
DCBBANK	68 Neutral	₹64.22B	8.97	―	0.76%	21.44%	17.14%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

Karnataka Bank Ltd. Corporate Events

Karnataka Bank Reappoints Two Independent Directors for New Three-Year Terms

Karnataka Bank’s board has approved the re-appointment of two non-executive independent directors, Dr. D. S. Ravindran and Mr. Balakrishna Alse S, for an additional three-year term each, effective from April and May 2026 respectively, subject to shareholder approval in line with SEBI LODR norms and the Companies Act. The bank has confirmed that both directors have not been debarred by SEBI or any other authority, and highlighted Dr. Ravindran’s extensive public-sector and digital governance experience, indicating a continued emphasis on strong, compliant governance and technology-driven oversight at the board level, which is likely to support the bank’s strategic and regulatory positioning.

Karnataka Bank Warns of Possible Disruption from One-Day Nationwide Bank Strike

Karnataka Bank has disclosed that its employee and officer unions, affiliated with national banking unions under the United Forum of Bank Unions, have called for a one-day nationwide strike on 27 January 2026 to press demands including a five-day banking week, regulated working hours and opposition to disinvestment in certain public-sector banks and regional rural banks. The bank has cautioned that if the strike goes ahead, normal functioning across its branches, offices and departments may be affected, though it is taking steps to maintain operations; it has not quantified the potential financial impact, leaving some uncertainty for customers and investors about the extent of any disruption.

Karnataka Bank Allots 10,000 Shares Under ESOS 2023

Karnataka Bank Ltd. has allotted 10,000 equity shares of face value Rs 10 each following the exercise of vested stock options under its KBL Employees Stock Option Scheme 2023 (ESOS 2023). The small equity issuance, approved by the bank’s Managing Director and CEO, reflects ongoing implementation of its employee incentive and retention programme, marginally increasing the share capital while aligning employee interests with shareholder value without indicating any major change in capital structure or strategic direction.

Karnataka Bank Appoints New Managing Director & CEO

Karnataka Bank Ltd. has announced the appointment of Mr. Raghavendra Srinivas Bhat as the new Managing Director and CEO, effective from November 16, 2025. This strategic leadership change, approved by the Reserve Bank of India, is expected to influence the bank’s operations positively and enhance its market positioning. The appointment will be presented to shareholders for approval within three months.

Karnataka Bank Releases Q2 FY 2025-26 Earnings Call Transcript

Karnataka Bank Ltd. has released the transcript of its Q2 FY 2025-26 earnings audio conference call, which was held to discuss the unaudited standalone and consolidated financial results for the quarter and half-year ending September 30, 2025. The release of this transcript aims to provide transparency and insights into the bank’s financial performance, which is crucial for analysts and institutional investors in assessing the bank’s market position and future prospects.