Valuation and Risks: We believe KMB is ready to grow as it has shifted its focus to asset side withemphasis on customer acquisition through organic or inorganic route by keepingan eye on risk.

September 2019. NII increased 16% to Rs 5051.85 crore, while other income moved up 27% to tax rate was higher at 25.06% in Q2FY2021, compared with 18.5% in Q2FY2020. Asset quality improves: The bank has improved the asset quality on consolidated as well as standalone basis, in the quarter ended September 2020....

Torrent Pharma: Torrent's Q2 performance reflects resilience in India business (+7% YoY) EBITDA margin was strong at 31.5% (+450bps YoY, down 67bps QoQ) driven by cost savings. Barring US, most businesses witnessed improved traction. The company repaid debt of Rs4.4bn in 1H and is on track to reduce it by Rs10bn in FY21. We like Torrent's India franchise and its superior return profile. Higher contribution from India justifies the premium multiple over peers. We tweak our estimates by 6%/-3%/1% in FY21/22/23 and revise our TP to Rs2,675 (from Rs2745) based on 16x EV/EBIDTA. Maintain ADD. Heidelberg Cement: Heidelberg Cement's (HEIM) revenue fell 2% YoY to Rs 5.14bn, as sales volume fell 2% (focus on better pricing sales). However, healthy realisation and low opex further boosted EBITDA/APAT by 3/7% YoY to Rs 1.26/0.62bn. Balance sheet remains strong with negative cash conversion of 22 days and net cash on books increasing to ~Rs 1.8bn. We continue to like HEIM for its retail presence in the lucrative central market, increased volume growth visibility, superior margin and return ratios and a net cash balance sheet. We maintain BUY with an unchanged target price of Rs 234/sh (8.5x Sep'22E EBITDA). Kotak Mahindra Bank: 2QFY21 earnings were significantly ahead of our estimates, led by better-than-expected operating performance and lower-than-expected LLPs. In stating that current non-specific provisions are more than adequate to cover the impact of COVID-19 and that it now sees significant potential for calibrated growth, the management was quite sanguine in its outlook. We have revised our earnings estimates upwards and...

Unwinding the cautious stance, turning focus towards growth Kotak Mahindra Bank (KMB) reported results above our expectations. NII grew by 16.8% YoY and 5.1% QoQ on account of NIM expansion, which was mainly led by reduction in cost of deposits. During the quarter, the reported SA rate declined further to 3.87% from 4.22% in 1QFY21 and 5.37% in 2QFY20. While there remains more room for further reduction as per the management, the same would be done strategically over time and not immediately. The non-interest revenue was also a key driver of earnings in 2QFY21, growing by 18.6% YoY and 87.78% QoQ on account of improved traction in fee income while non-fee other income was exceptionally high on account of investment gains. Advances were flat...

We upgrade our rating from Hold to Buy with a revised target price of 1550 (SOTP basis).

Consolidated PAT came in at | 2946 crore, up 22.4% YoY, largely driven by bank's profit. Overall performance of subsidiaries remained healthy with Kotak Life insurance reporting profitability at | 171 crore, up 18.8% YoY. Kotak Securities PAT was healthy at | 199 crore, up 33.6% YoY. Kotak AMC profitability was at | 84 crore, flat YoY. Kotak Prime, the non-banking arm,...

KMB delivered a strong 27% YoY growth in earnings at Rs21.8bn (PLe: Rs14.9bn) which were much above ours and consensus estimates. Strong beat was on back of (i) continued NII traction of 17% YoY despite loan book flattish QoQ & -4% YoY (ii) recovery in fees (iii) higher treasury income (had not booked in Q1FY21) and (iv) substantially lower provisioning than expectations. Strong liability franchise build-up over the years has significantly benefitted funding cost which is now amongst the lowest in the industry, but growth has been quite selective as management continues to...

We see no deterioration in RoA for the current year despite higher provisions and expectprofitabilitytoimprovetolifetimehighinFY22.KMBhasunderperformedin recentmonthsanditsvaluationpremiumtoHDFCBhasdissipated.Expectvaluationto reratefromcurrent3xFY22P/ABVisresponsetolikelycontinuationofnonlinear earningsgrowth.UpgraderatingtoBUYand12mPTtoRs1,670. A nearly 20% PPOP beat supported by 10% NII outperformance. Substantial...

Kotak Mahindra Bank (KMB) Q2FY21 numbers were strong with operational numbers beating expectations, stable asset quality (on a proforma basis) which were positives. Even on a proforma basis, GNPA would have been 2.70% and NNPA would have been at 0.74%; stable from Q1 levels), indicating better outlook Management indicated a shift of gears, to have higher focus on advances growth; with improving outlook (collection efficiency (for September at ~95%) is positive. We value standalone bank at ~3.9x its FY2023E book value and its subsidiaries at...

Kotak Bank's (KMB) Q2FY21 PAT at Rs 21.8bn (+27% YoY) beat estimates given strong 31% YoY operating profit growth and lower provisions.

Including standstill NPAs, slippages would have been ~1.1% and gross NPA would be stable QoQ at 2.7%. PCR increased by ~700 bps QoQ to 76% and stood at ~72% on a pro forma basis, implying healthy recoveries and low write-offs during the quarter. Standard loan cover stood at 0.6% of advances as of Sep-end, same as last quarter. Management noted that the stock of provisions the bank held was adequate and conservative. Despite weak growth trends, continued moderation in CoF has aided...

Kotak Mahindra Bank (KMB) reported a strong quarter with lower provisions and higher treasury income boosting earnings, even as core PPOP grew 19% YoY. The bank reported an uptick in fee income and margins too expanded 12bp QoQ, while loan growth stood flat. On the asset quality front, slippages stood lower (partially aided by the SC order), driving sequential improvement in asset quality ratios, while PCR increased sharply...

Kotak recorded a marginal improvement of 1.6% YoY in interest income to Rs. 8,422cr in Q1FY21. Although the months of April and May had negligible collections, the company had strengthened its collections teams by moving key leadership and sales teams to collections, thus witnessing improvements in the months of June and July. Despite having a flat to negative loan growth, Net-interest income registered a healthy growth of 15.9% YoY to Rs. 4,793cr with NIM remaining flat YoY at 4.44% in the quarter. Non-interest income comprising of fees and treasury related services was also up 1.6% YoY to Rs. 3,901cr. The company has decided to increase its provisions...

KMB's s'lone earnings of Rs12.4bn (PLe: Rs15.7 bn) was a miss on back of slightly higher provisions and lower other income (as bank did not book any treasury gains). NII growth of 18% YoY stood out despite loan growth being flattish YoY as bank has been materially benefitting from lowering cost of funding (150bps SA rate cut in 3 months). Moratorium has come off to 9.65% v/s 26% in May with certain collections to be made from Morat 1.0, but could add to stress eventually from H2FY21 onwards. We continue to build 80100bps of credit cost and 150bps of slippages in FY21/FY22E respectively. In our view, the bank has a very resilient balance sheet to any shock with strong...

Consolidated PAT was at | 1853 crore, down 4% YoY. Overall performance of subsidiaries stayed healthy with Kotak Life Insurance reporting profitability at | 161 crore, up 20.1% YoY. Kotak Securities PAT healthy | 169 crore, up 53.6% YoY. Kotak Prime, non-banking arm, de-grew 55.5%...

Kotak Mahindra Bank (KMB) reported NII growth of 17.8% YoY and 4.6% QoQ despite advances declining by 1.9% YoY and 7.2% QoQ, reflecting strong quality of earnings at lower risk. NIM stood at 4.4%, down 8bps YoY and 32bps QoQ. Deposit flows were strong with a growth of 12.3% YoY, down marginally QoQ, despite the bank reducing its rates considerably during the quarter. The cost of SA stood at 4.22% compared to 5.23% in 4QFY20 and 5.51% in 1QFY20. With the bank having taken cuts in the latter part of the quarter, we expect SA rates to drop further in 2QFY21. On the back of this, coupled with a low-rate environment, the cost of funds dropped to 4.2% compared to ~4.6% in 4QFY20. This helped in sustaining strong margins even as calc....

Kotak Mahindra (KMB) reported steady performance amidst Covid-19 pandemic with NII up 18/5% YoY/QoQ even as loan growth was muted (down 7% QoQ) and NIM moderation at 4.4% (down 9bps YoY). Deposit franchise remains strong despite cut in rates. CASA stood at 57%.

27 July 2020 KMB reported a mixed quarter with weak earnings performance, affected by lower fee income, 32bp QoQ decline in margins and sharp sequential decline in loan growth. On the asset quality front, slippages were elevated, driving 45bp QoQ increase in GNPA ratio while provision coverage remained broadly stable. On the business front, loan book declined 7% QoQ, affected by the (a) lockdown, and (b) banks cautious approach in a weak macro environment. SA deposits growth was steady, driving further improvement in CASA mix to 56.7%. We have cut our PAT estimate for FY21/22E by 10%/11%, primarily to factor in higher credit cost, lower growth and other income. Maintain KMB reported 9% YoY decline in 1QFY21 standalone PAT to INR12.4b (6% below our estimates), affected by higher decline in other income and elevated provisions toward COVID-19 of INR6.2b. KMB, thus, has total COVID-19 provisions of INR12.

We recommend a BUY on KOTAK MAHINDRA BANK with a Target Price of Rs 1,280, an upside of 9% from CMP of Rs.1,173 and Stop Loss Rs 1,110

The cost-to-income rate has further improved to 46.02% in Q4FY2020 from 49.95% in the previous quarter and 47.15% in the corresponding quarter last year. However, the credit cost (NPA provisions as an annualized percentage of loans) jumped to 0.68% in Q4FY2020 from 0.47% in Q4FY2019 due to COVID 19 related provisions of Rs 660 crore. Further, the bank exhibited some moderation in loan growth to 7% at end March 2020. The business growth of the bank also eased to 12% at end March 2020....