Karnataka Bank is a private sector bank, which surprisingly does not have a promoter. The stock has been trading in the range of Rs.108 (March 2018) and Rs.181 (June 2017). Of late, though, the stock has been wavering, what with talks of bad loans in the banking sector in general and public sector banks in particular. In fact, the stock is available at its lower levels as of now. Who's the taker?
The bank has had four major individual public shareholders. As of September 2017, we have got these:
Kedia has been more vocal on the prospects of the bank and consequently, its stock. Of course, he walked the talk. In May 2016, he bought 1 m shares at Rs.121.95 per share. In Feb 2017, he bought 1.5 m shares at Rs.122.18. That means 3.16 m shares were held by him prior to becoming a major (greater than 1%) shareholder. He had a total of 5.66 m shares as of Sept 2017.
I think we should ignore Nomura; it is either crazy to do what it did in Oct 2016, or we do not have the full story.
Kedia said, in Oct 2016, he was expecting Karnataka bank to be a multibagger.
He backed up his faith with a column in Outlook business in Jan 2017; and why not? In fact, he was bullish in Nov 2017 too. Then something happened. By Dec 2017, Kedia's shareholding in Karnataka bank dropped to 3.3 m shares.
That is down 2.33 m shares. Surprisingly, we don't find any bulk or block deals in either NSE or BSE on the stock by Kedia. That's a piece of the puzzle.
So what do we do with the stock? First, you do not follow anyone without doing your own research. To each his or her own; circumstances of one will be different from another. Caveat emptor is my favorite quote. Be responsible for your own actions.
For Karnataka bank, it comes to estimating how much of Rs.12.6 b net NPAs and Rs.8.9 b restructured assets is going to actually turn bad. My guess is that the stock is trading at about 1 x its book value after adjusting for the bad stuff.
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