Karnataka Bank Net Income surged on 45.1% in 2015 and Revenue surged on 12.8%

22-05-2015 • About Karnataka Bank ($KTKBANK) • By InTwits

Karnataka Bank reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Karnataka Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's in pair with industry average of 1.4%.
CAPEX is quite volatile: 812 in FY2015, 569 in FY2014, 399 in FY2013, 296 in FY2012, 212 in FY2011
The company has business model with average profitability: ROIC is at 10.4%
It operates with high leverage: Net Debt/EBITDA is 1.4x while industry average is

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Karnataka Bank ($KTKBANK) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	26,619	33,935	41,951	46,657	52,651	12.8%
Net Income	2,046	2,461	3,481	3,110	4,515	45.1%
Balance Sheet
Cash	19,398	17,048	17,180	21,527	24,884	15.6%
Short Term Debt	7,242	2,439	9,392	10,464	5,485	-47.6%
Long Term Debt	5,978	11,471	8,903	9,565	7,904	-17.4%
Cash flow
Capex	212	296	399	569	812	42.7%
Ratios
Revenue growth	-56.1%	27.5%	23.6%	11.2%	12.8%
Net Income Margin	7.7%	7.3%	8.3%	6.7%	8.6%	1.9%
CAPEX, % of revenue	0.8%	0.9%	1.0%	1.2%	1.5%	0.3%
ROIC	5.5%	6.8%	10.2%	7.7%	10.4%	2.7%
ROE	9.6%	9.8%	12.8%	10.5%	14.0%	3.5%

Revenue and profitability

The company's Revenue jumped on 12.8% in FY2015.

Net Income marign increased slightly on 1.9 pp from 6.7% to 8.6% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 1.5%. The company showed small growth in CAPEX/Revenue of 0.67 pp from 0.87% in FY2012 to 1.5% in FY2015. Average CAPEX/Revenue for the last three years was 1.2%.

Return on investment

The company operates at good ROE (14.02%) while ROIC is low (10.39%). ROIC increased on 2.7 pp from 7.7% to 10.4% in FY2015. ROE increased on 3.5 pp from 10.5% to 14.0% in FY2015.

Leverage (Debt)

Debt dropped on 33.2% in FY2015 while cash surged on 15.6% in FY2015.

Management team

The company's CEO P Jayarama Bhat has spent 9 years at the company.

Appendix 1: Peers in Banks

Below you can find Karnataka Bank benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Kotak Mahindra Bank ($KOTAKBANK)		18.4%	22.9%	7.1%	26.1%
Dcb Bank ($DCBBANK)		26.7%	26.2%	22.5%	25.3%
Syndicate Bank ($SYNDIBANK)		32.2%	11.9%	7.9%	20.2%
Yes Bank ($YESBANK)		53.0%	33.7%	21.6%	17.7%
Axis Bank ($AXISBANK)		39.0%	24.5%	13.1%	15.6%
Median (23 companies)	-36.9%	29.5%	15.6%	10.3%	9.9%
Karnataka Bank ($KTKBANK)		27.5%	23.6%	11.2%	12.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
State Bank Of Mysore ($MYSOREBANK)	1.3%	1.6%	1.3%		3.5%
Jammu & Kashmir Bank ($J&KBANK)	5.6%	1.4%	1.3%	2.2%	3.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	4.4%	2.1%	1.4%	1.6%	2.4%
Dcb Bank ($DCBBANK)	1.6%	9.0%	7.0%	1.6%	1.9%
Karur Vysya Bank ($KARURVYSYA)	4.2%	2.0%	2.9%	2.5%	1.7%
Median (23 companies)	1.3%	1.2%	1.2%	1.3%	1.3%
Karnataka Bank ($KTKBANK)	0.8%	0.9%	1.0%	1.2%	1.5%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Axis Bank ($AXISBANK)	10.2%	9.6%	8.9%	9.1%	8.8%
Yes Bank ($YESBANK)	11.8%	9.8%	8.4%	8.4%	8.7%
Kotak Mahindra Bank ($KOTAKBANK)	7.8%	6.8%	6.5%	7.1%	8.5%
Lakshmi Vilas Bank ($LAKSHVILAS)		6.5%	7.5%	0.7%	6.1%
Dcb Bank ($DCBBANK)			3.4%	5.1%	6.0%
Median (23 companies)	7.5%	7.6%	6.0%	3.2%	4.7%
Karnataka Bank ($KTKBANK)	5.5%	6.8%	10.2%	7.7%	10.4%

Karnataka Bank stock price chart

Karnataka Bank financials

mln.	FY2010	FY2011	FY2012

Revenue	60,608	26,619	33,935
EBITDA	0.000	0.000	0.000
Net income	1,671	2,046	2,461
CAPEX	323.5	212.4	295.6
Debt	9,248	13,220	13,909
Cash	17,431	19,398	17,048

About Karnataka Bank

The Karnataka Bank Limited provides personal and business banking products and services in India. The company operates in four segments: Treasury, Corporate and Wholesale Banking, Retail Banking, and Other Banking Operations. It offers savings and current bank accounts, cash certificate, fixed deposits, cumulative deposits, insurance linked savings bank deposits, and resident foreign currency accounts; and education loan schemes, home loans, car finance schemes, and schemes for salaried persons. The company also provides working capital finance, term loans, and infrastructure finance; and various business finance products, such as retail trade finance, project finance, export finance, and agriculture finance, as well as finance for small, medium, and large scale industries. Further, the company provides debit, gift, and travel cards; insurance, depository participant, and money transfer services; ATM, Internet, and mobile banking services; and mutual fund products, as well as NRI services. As of June 30, 2014, it operated 612 branches and 728 ATMs. The company was incorporated in 1924 and is headquartered in Mangalore, India.