Karur Vysya Bank Ltd.

“KVB has executed a credible turnaround — GNPA halved, ROE at ~17%, capital adequacy solid — but at P/B 2.25x the recovery is fully priced. The bank lacks a durable moat, has no promoter alignment, operates in a competitively intensifying MSME segment, and faces a real (not merely uncertain) risk of a ROE and multiple compression double-whammy if a credit cycle turns. The base case is a ~10% CAGR — market-average returns for above-average concentration risk. Capital is better deployed in higher-quality franchises with wider moats and more compelling entry points.”