Kotak Mahindra Bank Ltd. share price target

Kotak Mahindra Bank (KMB), on a standalone basis, reported 24% growth in Net Profit to Rs 1595.90 crore in the quarter ended December 2019 (Q3FY2020) over the corresponding quarter of last year. The bank has posted jump in net interest margin (NIM) and treasury income supporting the performance of the company. NIMs of the bank have improved to 4.69% in...

20 January 2020 KMBs third-quarter result mirrored overall slowdown in the economy, which led to moderation in loan growth and elevated slippage trajectory. Overall operating performance was healthy with PPoP increasing by 23% YoY, despite the bank making INR2b provisions toward pension obligations. We cut our EPS estimate for FY21/22 by 4%/7%, primarily as we factor in lower loan growth assumption. Maintain Standalone PAT increased 24% YoY to ~INR16b (4% miss v/s our estimate of NII grew ~17% YoY to INR34.3b (2% miss), impacted by moderate loan growth; however, margins improved 8bp QoQ to 4.7%. Opex increased 21% YoY to INR23.8b, led by one-off of INR2b toward pension obligations. Thus, the C/I ratio came in at 49.9% v/s 45.2% in 2Q. Loan book grew ~10% YoY to INR2.2t, reflecting the slowdown in the business banking/corporate banking and CV/CE portfolios. Deposits growth moderated to 12% YoY to INR2.4t, albeit term deposits grew by 5% YoY.

KMB's bank earnings of Rs15.9bn (PLe: 16.9 bn) was lower than estimates on back of miss in NII and higher provisioning on few lumpy corporate slippages. NII growth has been reflected from lower growth trajectory in-line with macroeconomic factors and similar to peer banks. A strong liability built-up (CASA + Retail TDs) in last few years is reflecting in rapid lowering in cost of funds and is now equivalent to some of the large banks in the sector leading to all time high NIM of 4.69% and also has opened up opportunities for new product penetration and drive growth ahead. Small setback has been increased slippages from corporate & unsecured retail leading to moderate...

Kotak Mahindra Bank's (KMB) Q3FY20 PAT at Rs 16bn was below estimates due to weak NII growth and high provisions.

Kotak Mahindra Bank (KMB) has forged a powerful banking franchise backed by a formidable liability profile.

KMB is India's leading full services financial conglomerate, dominating the banks, securities and investment banking space.

CASA ratio stood at 53.6% (up ~340bps YoY), driven by 22.0% and 20.2% YTD increase in average CA and SA deposits, respectively. Advances growth slowed to 12.0% YoY, despite strong performance in the Home Loans and LAP division which grew 23.0% YoY....

Not Immune to Macroeconomic Risks; Valuations appear Stretched Kotak Mahindra Bank's (KMB) 2QFY20 operating metrics were largely in line with our estimates, with NII, PPoP, and PBT growing by 25%, 20%, and 21% YoY respectively. However, reported PAT was 20% ahead of estimates owing to lower than expected tax rate at 18%. Nonetheless, the bank's performance wasn't immune to macroeconomic risks with moderation loan growth at 15% YoY and rise in GNPAs (13 bps QoQ). Growth in fee-based income moderated to 14% YoY mainly led by weaker growth in advances. Margin improved to 4.6% driven by decline in cost of funds, improved pricing power, and sequentially higher CD ratio. CASA deposits grew...

The ongoing slowdown in the economy impacted credit growth as credit growth across portfolio witnessed moderation though above industry at ~15% YoY at | 213299 crore. Notable slowdown was witnessed within small business & CV book. Growth in corporate segment continued to remain in single digit at 7.5% YoY. On the back of credit slowdown, the management has guided for mid-teen credit growth with cautious approach towards SME business. Deposit growth was lower at 13% YoY to | 233071 crore. However, unlike peers, CASA accretion was higher with 24% YoY and 19%...

KMB reported 2QFY20 standalone PAT of INR17.2b (+51% YoY, 12% beat), PBT was in line with 21% YoY growth. PAT stood at INR24.1b (+38% 23 October 2019 YoY). For 1HFY20, standalone PPoP/PAT was up 19%/42% YoY to INR49.1b/INR30.8b. NII grew 25% YoY to INR33.5b (in-line), led by healthy margins of 4.6% (+12bp QoQ). Other income growth moderated to 1.6% YoY (at INR12.2b). Loan book grew 15% YoY to INR2.