Discounted Cash Flow Calculation for BSE:532652 using Excess Returns Model Model
The calculations below outline how an intrinsic value for Karnataka Bank is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Karnataka Bank's earnings available for a low price, and how does
this compare to other companies in the same industry?
Karnataka Bank's earnings are expected to grow significantly at over 20% yearly.
Karnataka Bank's revenue is expected to grow significantly at over 20% yearly.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Karnataka Bank's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Mahabaleshwara M. S. has over 32 years of banking experience both at operational and administrative levels. He holds M.Sc.(Agri) with specialization in Agronomy, from the University of Agricultural Sciences (UAS), Bengaluru and is a Certified Associate of the Indian Institute of Bankers (CAIIB) and has also done Post Graduate Diploma in Business Management (PGDBM). He joined the Karnataka Bank Limited (“Bank”) as an Agricultural Field Officer in 1984. He serves as Managing Director & Chief Executive Officer since April 04, 2017 and also serves as Director of Karnataka Bank Ltd. During his tenure, he worked in various branches and also at Head office of the Bank before being elevated as the Head of the Delhi Region. He played a key role in launching KRISHI CARD scheme of the Bank and has been the member of the prestigious "Chairman's Club" for 5 times, for his outstanding performance as Branch Head. He played a key role in expanding the foot prints of the Bank in the Northern part of India by opening good number of branches. He also served as Regional Head of Mumbai Region before being elevated to the Post of General Manager in 2011. In the year 2013 he was promoted as Chief General Manager and was overall in-charge of the Departments of Credit, Planning & Development, IT & MIS, Treasury & Accounts and HR & IR. He was actively involved in Bank's BPR (Business Process Reengineering) initiative and lateron played a pivotal role in the Digital Banking initiatives of the Bank. He is also actively involved in the implementation of "KBL Vision 2020", a five year growth plan of the Bank. He also served as the Non-Executive Director on the Board of Universal Sompo General Insurance Co. Ltd.
Insufficient data for M. to compare compensation growth.
M.'s remuneration is lower than average for companies of similar size in India.
Management Team Tenure
Average tenure of the
management team in years:
The average tenure for the Karnataka Bank management team is less than 2 years, this suggests a new team.
M. Mahabaleshwara Bhat
MD, CEO & Director
GM & CFO
Chief Operating Officer
Deputy GM & CTO
M. V. Bhat
Chief Manager of Public Relations
Chief Risk Officer
General Manager of Credit Monitoring Department
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Karnataka Bank board of directors is about average.
The Karnataka Bank Limited provides business and personal banking products and services in India. The company operates in four segments: Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations. It accepts savings and current accounts, cash certificates, fixed and cumulative deposits, non-resident rupee accounts, ordinary non-resident accounts, and foreign currency accounts; and offers loan products, such as vehicle, home, education, personal, MSME, mortgage, women entrepreneur, gold, and other loans, as well as loans against property and fixed deposits. The company also provides debit, credit, gift, deposit only, image, and travel cards; life, general, and health insurance products; investments services; and remittance and other services. In addition, it offers forex services, which include pre and post-shipment, export collection bills, export LC advising, inward remittance facility, import letter of credit, import bill collection, buyer’s credit, and outward remittances. Further, the company provides point of sale service for merchant's payment solutions: and KBL e-COLLECT, a fee payment processing platform, which enables the institution to offer parents and students a convenient way to pay their fees through a range of payment options. Additionally, it offers various loans for agriculture; and other services, such as Internet banking, mutual funds, demat services, locker facility, and funds transfer services. As of March 20, 2019, the company operated through a network of 839 branches. The Karnataka Bank Limited was founded in 1924 and is headquartered in Mangalore, India.
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