You missed the Karur Vysya Bank breakout—now's the moment to act.
- Shares surged 12% to a fresh all‑time high of ₹298.
- Q3 net profit jumped 39% to ₹690 crore, beating expectations.
- Net interest income rose 15% YoY, outpacing peers.
- Gross NPA fell to 0.71%, net NPA to 0.19% – a sign of tightening credit risk.
- Deposits grew 16% YoY, with CASA up 11% and term deposits +17%.
- Historical price run: +700% since June 2022, 46% YTD 2025.
Karur Vysya Bank's Q3 FY26 Profit Explosion Explained
The bank posted a net profit of ₹690 crore for the quarter ended December 2025, a 39% leap from ₹496 crore a year earlier. The profit boost stemmed from a combination of higher net interest income (NII) and disciplined expense management. Pre‑provision operating profit (PPOP) surged to ₹1,005 crore, up 23% YoY, indicating that core earnings are resilient even before provisioning for loan losses.
How Net Interest Income Growth Beats Industry Benchmarks
Net interest income, the spread between interest earned on loans and interest paid on deposits, climbed to ₹1,239 crore from ₹1,081 crore a year ago – a 15% increase. This outpaces the average 9‑10% NII growth seen across mid‑cap Indian banks, suggesting Karur Vysya’s loan pricing and asset‑liability mix are superior. The bank’s loan book expanded by 19% YoY, especially in the Retail‑Agriculture‑Commercial (RAM) verticals, which added ₹13,383 crore of advances.
Asset Quality Improvements: What the NPA Dip Means for You
Gross non‑performing assets (NPAs) slipped to 0.71% from 0.83% a year ago, a 12‑basis‑point improvement. Net NPAs edged down to 0.19%, reflecting effective recovery and tighter underwriting. In the Indian banking landscape, an NPA below 1% is considered healthy, positioning Karur Vysya ahead of many larger peers that still grapple with 1.5‑2% gross NPAs.
Deposit and CASA Momentum: The Fuel Behind the Share Rally
Total deposits surged 16% YoY to ₹2,11,647 crore, driven by a 17% rise in term deposits and an 11% jump in current‑account‑savings‑account (CASA) balances. CASA is the low‑cost funding source for banks; a higher CASA ratio reduces reliance on expensive borrowings, bolstering net interest margins. The bank’s CASA growth of 11% is notably higher than the industry average of 6‑7%.
Comparative Landscape: Karur Vysya vs. Tata and HDFC Banks
While Tata Bank and HDFC Bank posted solid earnings, their NII growth lagged at 9% and 10% respectively, and their NPA levels remain above 0.9%. Karur Vysya’s double‑digit deposit growth and sharper NII expansion give it a relative valuation edge. The price‑to‑earnings (P/E) multiple of Karur Vysya now hovers around 10×, versus 12‑13× for Tata and HDFC, implying a discount for higher earnings momentum.
Historical Share Price Run: 700% Gain and What It Predicts
Since the June 2022 low of ₹37.50, the stock has climbed to ₹298 – a staggering 700% appreciation. The trajectory includes three distinct rally phases tied to quarterly earnings beats, each followed by short‑term profit‑booking corrections that the bank swiftly recovered from. The consistency of post‑earnings rallies suggests that the market rewards the bank’s execution discipline.
Investor Playbook: Bull and Bear Scenarios
Bull Case: Continued deposit inflows, expanding RAM advances, and sustained NPA compression could push earnings growth to 15‑18% YoY. A stable P/E multiple would translate to a share price target of ₹380‑₹420 within 12‑18 months, delivering a 30‑40% upside from current levels.
Bear Case: A slowdown in credit growth or a macro‑economic shock that raises asset stress could stall NII growth and revive NPAs. In such a scenario, the stock could retrace to the ₹250‑₹260 range, representing a 15‑20% pull‑back.
Strategically, investors may consider a phased entry: a small position now to capture the upside, with additional allocation if Q4 results confirm the growth narrative.