Kotak Mahindra Bank Ltd. share price target

Kotak Bank's (KMB) Q3FY21 PAT of Rs 18.5bn (+16% YoY) was backed by strong 29% growth in operating profit.

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....

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 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,...

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

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...

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...