The Karnataka Bank Limited Fair Value
KTKBANK · Financial Services · Current price ₹335.2
Is The Karnataka Bank Limited undervalued?
We estimate the fair value of The Karnataka Bank Limited at ₹395 per share, against a market price of ₹325. That puts the share price about +21.4% below our estimate, at medium confidence. This is our view of what the business is worth, not a target price or a forecast of where the share price will go.
How this fair value is calculated
This estimate comes from 3 methods: Justified P/B (Gordon) (₹395), Residual income (excess return on book) (₹352), Relative P/B (₹463). Each is weighted by how well its inputs held up for this company. The full working, including the assumptions and what data was missing, is set out below.
The range around this estimate
Our estimate for The Karnataka Bank Limited spans ₹352 to ₹435. A margin of safety means buying meaningfully below the estimate: the wider the range, the more room the assumptions leave for error.
How we got this fair value
Every number below is part of the same estimate for The Karnataka Bank Limited. Nothing here is a target price or a forecast of where the share price will go.
Workable, with real gaps. Weigh it alongside your own view rather than on its own.
Estimate range ₹352 – ₹435
Why this method for this business
The justified P/B and residual income models are most appropriate for a private sector bank, as they focus on sustainable ROE and book value, which are critical for evaluating banks. The relative P/B model provides a market-based comparison for context.
The models behind the number
Each method is weighted by how well its inputs held up for this company.
11% sustainable ROE vs 10.6% cost of equity justifies ~1.1× book
Book value plus the present value of returns earned above the 10.6% cost of equity
- DCF is not suitable for banks due to the high leverage and debt-driven nature of the business
- EV/EBITDA is not used as EBITDA is not a reliable metric for banks due to high interest expenses
What was missing
- Lack of detailed peer comparisons for P/B ratios
- Limited forward EBITDA estimates
- No detailed analysis of credit risk exposure
What drives it
14 inputs, grouped by how strong each claim is
- ROE (normalized)
- 11.1%
- Dividend payout
- 13.5%
- Book value / share
- 349.8 ₹
- Peer-median P/B
- 1.32×
- Peers used
- 9
- Book value / share
- 349.78 ₹/share
computed
ratios/derived
reported
peer-median
peer-median
computed
- Cost of equity
- 10.6%
building-block
- Near-term growth g
- 9.6%
- High-growth years
- 10 yrs
- Terminal ROE
- 11.1%
- Terminal growth g
- 5%
computed
building-block
faded toward COE + moat
computed
- Moat
- None
- Excess-return horizon
- 3 yrs
computed
computed
- Justified P/B
- 1.13×
two-stage Gordon
Who computed this
A language model (qwen3:8b) selects the valuation method and the judgement inputs for The Karnataka Bank Limited: which models suit the business, the moat, the growth and margin assumptions. It does not produce the number. The fair value itself is computed in Python by a deterministic engine (version 2026.08.1) from those inputs, so the same inputs always give the same result and every figure above can be traced to a source.
Estimated 14 Sept 2026. Re-run as new financials and news arrive.
How we value stocks
We estimate what a business is worth from its own economics: cash flows, returns on capital, and a multiple justified by its quality, rather than from where the share price has been. A fair value estimate is a view, not a verdict, and it is only as good as the inputs listed above.
Read the full fair-value methodologyMore on The Karnataka Bank Limited
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.