I would recommend you to read their annual report to understand their recent developments. I could give you some explanations but that would be against the forum’s guidelines.
Rather, I would ask you a different question, what can go wrong with Karnataka Bank with respect to other 38 banks?
Your views are most welcome!
this list has ktk bank also
KTK Bank’s exposure as per list - 123.27cr
Growth story will be delayed further.
What I understand is that 22 crores is without satisfaction. Rest is satisfied. Does it mean that only 22 crores is potential loss? Given the date of lending, maybe NPA already recognised?
The bank has achieved its target of 800 branches much before time. Wipro’s star Mythily joins Karnataka Bank as an Additional Director. It will be interesting to watch how they bank grows in the subsequent years. Fascinating!
Vijay Kedia has sold his stake partially in Karnataka Bank.
If really keen to know why Vijay Kedia sold part of his holdings, Hear it from his tweets please.
And this was his previous tweet he was referring !!!
Disclosure: No holding or tracking position. Exited long back.
If I remember it right, Mr Vijay Kedia mentioned on TV said that he sold it for buying something else (he might have used it to buy kokuyo & dredging Corp) and he would buy ktk bank in future. That said he may buy it only if the execution by Management improves. If he fears there might be more Gitanjali gems kind of fraud exposures hidden he would have sold out fully this quarter. We will come to know about that in Mar 2018 SHP anyway.
Overall economy is clearly bouncing back. I expect banks should grow at substantial pace for next few years in benign economic environment.
Disc: invested (substantial part of PF)
Avg price: 150
Don’t have much knowledge in banking. Invested based on perceived cheapness & perceived change in attitude of management since last few years.
Don’t bet based on others conviction. Read their annual reports and build your own conviction. There might be a lot of different opinions. Rely on your data.
Didn’t entire banking sector changed since the last annual reports of all the banks? Nevertheless, that’s a sweet advice.
Why he sold - he mentioned in this during his TIA Chennai talk.
Hi Parth, can you elaborate on what he mentioned abt Karnataka bank in TIA meet? Thanks.
Hi Saravanan, thanks for the advice. I did as much research I could. But I have to rely up to certain extent on the huge experience of investors like Mr Kedia.
Hi. Could some one point out what is different about this bank. Other banks of same size also have similar exposure is everybody betting on Mr kedia
We may be veering of from the actual purpose of the thread here. Still i would like to post one last post on borrowed conviction. Borrowed confiction is difficult to implement when stock price keeps falling( or rising too). But if you stick with one strategy of Mr Pabrai, the borrowed conviction can be success formula too. But in US, the big investors need to disclose their holdings periodically, which makes Mr Pabrai’s strategy more easier to implement. In India too, I believe it can be implemented with reasonable effort.
https://www.forbes.com/sites/janetnovack/2017/12/15/the-free-lunch-15-stock-portfolio/#167ed97a6b38
Yes… conviction matters, whether borrowed or self. We can’t be buying everything that every big investor buys. An investor needs to understand the stock thoroughly or leave it to luck then.
Coming back to Karnataka Bank, the unknown is the size n scale of unrecognized NPAs. All banks except HDFC, Kotak etc are having this challenge.
With my limited knowledge about banks & investing, my perspectives on Ktk bank are:
Positives:
the branch network growth is phenominal in last few 5 yrs (if i remember right they have grown from 400 to 800 in last years; considering its a 100 yrs old branch, we can sense that they are hungry for growth)
they have set themselves a vision which is very ambitious;
they hired an external reputed (not sure how good they are with banking) consultant (BCG) to fill in their knowledge gap
they have setup high level committee to review weekly progress of transformation initiatives
special teams for monitoring of bad and would be bad accounts & recovery of npas
the current CMD has plans for making most of the employees as more of sales ppl (my guess is to sell retail loans, insurance, MF products) by freeing them up from regular banking activities; this he wants to achieve by making customers use technology (online banking, apps etc) for regular banking activities
focusing on high rated corporates for corporate loans; too much focus on crowded retail segment is not good idea according to my opinion
the valuation is close to psu banks
Negetives:
Sorry abt not being detailed enough with numbers; these are my top the mind observations
You’ve summed it up really well, we need to look beyond numbers too to understand the story.
Here is a discussion on KTK bank with several inputs. Though good to have different perspectives, please take all these with a pinch of salt and do your own analysis.
I believe when you invest in a stock , if possible look from a customers prespective. For a bank , individual (retail) customers matter a lot. Just visit a karnataka bank branch , check the website. Compare it with website of industry leaders or compare it with yes bank. Then decide whether you would really like to have an account with karnataka bank? Is the website really customer friendly ? Most of your answers will get answered.
If you check the twitter handle , you will get a feel how customer focused they are.
I may be sounding foolish ,but if customer touch points are not good , merely increasing branches wont help. Without customer focus ,its tough to grow.
Disclosure - Not invested
It’s a matter of conviction. Let us see what will happen in the next 3-5 years. I am not a firm believer in short term contraction.
Here is the video of Mr Vijay Kedia’s interview as part of Bloomeberg’s “Alpha Moguls”.
He mentions the reason for selling part of Karnataka bank.
He feels, the end of NPA rising is not over yet and could continue for few more quarters. He sold it as it is liquid stock and bought Everest industries.
It will be interesting to see the next SHP of Ktk bank, we will come to know he has sold out entirely or still kept his 1.18% stake.
The next quarter results, we will come to know whether there will be degradation in NPA scenario. If NNPA improves, it will be game changer.
