Karnataka Bank shares declined 1.97% to trade at ₹265.60 in Friday's session, snapping a three-day winning streak despite delivering strong Q4FY26 results. According to Anand Rathi's latest research report, the bank demonstrated robust performance across key operating parameters including advances growth accelerating to 6.9% year-on-year in Q4FY26, marking a significant turnaround from -1% quarter-on-quarter in Q3FY26. The stock's decline comes despite the positive fundamental outlook, with analysts suggesting the broader trend remains positive despite today's decline.
The bank's advances growth accelerated to 6.9% year-on-year in Q4FY26, led by strong traction in corporate loans, with the management guiding for 15-20% growth in FY27. As reported by Anand Rathi, the bank's net interest margin (NIM) improved 15 basis points quarter-on-quarter to 3.07%, driven by higher yields and lower cost of funds. The management expects margin to remain broadly stable, supported by a favourable shift in loan mix towards higher-yielding segments. Lower operating expenses and moderate credit costs supported overall profitability during the quarter.
Asset quality showed significant improvement with gross non-performing assets (GNPA) declining by 54 basis points quarter-on-quarter, supported by sharply lower slippages. According to Anand Rathi's report, provision coverage ratio (PCR) improved by 417 basis points quarter-on-quarter. The brokerage expects the bank to sustain return on assets (RoA) near 1% over the medium-term with stable margins, controlled operating expenses and healthy asset quality. This improvement in asset quality metrics supports the bank's overall financial health and growth prospects.
From a technical perspective, analysts maintain a positive outlook on Karnataka Bank. Ravi Singh from Mastertrust noted that the stock has shown strong recovery after bouncing back from the ₹245–250 zone, currently trading near ₹265. He identified ₹272–275 as the immediate resistance area, with a breakout above this zone potentially opening room for ₹285–295 levels. AR Ramachandran from Tips2trades highlighted strong support at ₹247.7 on daily charts, suggesting a daily close above ₹270 resistance could lead to an upside target of ₹295.4. Kranthi Bathini from WealthMills Securities recommended that investors holding the stock should continue with their positions, while fresh buyers should consider buying on dips.
