Kotak Mahindra Bank Ltd. share price target

Maintain BUY with an SOTP of Rs 1,400 (4.25x Dec-20 core ABV of Rs 263 + Rs 281 for subs). Robust operating performance (NII: +23/9% YoY/QoQ), book growth (+24/6%) and CASA traction (+28/5%), at KMB continued into 3QFY19. Lower GNPAs (~2.07% vs. 2.15% QoQ) coupled with a higher PCR (~66.2%) indicate further improvement in asset quality. Margins increased (~4.33%, +13bps) due to improving pricing power and rise in the share of low cost deposits. The contribution of most subsidiaries to consolidated net earnings reduced during the quarter, attributed to unfavourable environs.

Net interest income (NII) came in at | 2939 crore, up 22.8% YoY, on the back of healthy credit growth of ~24% YoY and improvement in margins of ~13 bps at 4.3%. Core fee income growth remained healthy at 25% YoY to | 1038 crore Operational expenses came in a tad higher at | 1965 crore, up 21.8% YoY. The operational performance remained healthy with profit prior to provision (PPP) at | 1938 crore. The bank had reversed investment MTM of | 272 crore in the quarter...

CASA ratio of KMB improved by 400bps to 50.7% against 46.7% YoY. GNPA/NNPA ratios improved to 2.07%/0.71% against 2.31%/1.09 % YoY. Earnings are expected to sustain a healthy growth of 24% CAGR in FY1821E on the back of robust loan growth....

Kotak Mahindra Bank Beats Estimates On Strong Loan Growth Kotak Mahindra Bank (KMB), on a standalone basis, reported robust 23% growth in Net Profit to Rs 1290.93 crore in the quarter ended December 2018 (Q3FY2019) over the corresponding quarter of last year. The bank has exhibited healthy improvement in asset quality, acceleration in loan growth and rebound in its net interest margins (NIMs) in Q3FY2019. NIMs of the bank have improved to 4.33% in Q3FY2019 compared with 4.20% in the previous quarter and 4.27% in the corresponding quarter last year. The bank has also written back investment book related...

Amidst the headline noise we see pressure points at the core. While the blended growth was healthy, we sense areas of market share loss and weakness in the retail. Headline NIMs were up (4.33% vs 4.2% QoQ).

Provision write-backs and healthy NII helped KMB to report strong 3QFY19 PAT of INR12.9b (+23% YoY, marginally ahead of our estimate). NII grew 23% YoY to INR29.4b, led by healthy loan growth of 23% YoY/6% QoQ and margin expansion of 13bp QoQ to 4.33%. For 9MFY19, PPoP 21 January 2019 grew 18.0%, while PAT increased 17% YoY. led by strong growth in retail loans (+25% YoY) and corporate loans (+22.5% YoY), while deposits grew 18% YoY (CASA deposits up 28.5% YoY). SA deposits continue growing strongly by 31% YoY (SA cost of 5.67%). Core deposit mix (CASA + TD < INR50m) stood at 80% of total deposits.

NIM witnessed marginal compression of ~20 bps from 4.3% in Q2FY18 to 4.1% in Q2FY19 due to faster decline in yields. CASA ratio of KMB improved by 240bps to 50.2% against 47.8% YoY. GNPA/NNPA ratios improved to 1.91%/0.73% against 2.14%/1.08 % on YoY. Earnings are expected to sustain a healthy growth of 23% CAGR on the back of robust loan growth at 19% CAGR. With a stable earnings outlook, we value KMB at 3.9x and maintain our...

ICICI Securities Ltd | Retail Equity Research The Bombay High Court (HC) denied an interim stay to Kotak Mahindra Bank (KMB) with respect to its December 31 deadline to dilute its promoter holding. The ongoing debate is on using non-convertible perpetual noncumulative preference shares (PNCPS) as a means for dilution. According to RBI commentary now, PNCPS has no voting rights. The next hearing by the HC is scheduled on January 17, 2019 while the December 31, 2018 deadline to reduce the promoter's stake below 20% still stands. KMB had issued 100 crore non-convertible PNCPS of face value | 5 each...

improved to 46.21% in Q2FY2019 from 47.20% in the corresponding quarter last year. However, the net interest margins (NIMs) eased to 4.20% in Q2FY2019 compared with 4.30% in the previous quarter and 4.40% in the corresponding quarter last year....

Maintain BUY with SOTP of Rs 1,377 (4.25x Sept-20 core ABV of Rs 255 + Rs 293 for subs). KMBs stellar show continued into 2Q as (1) book growth sustained (+21%, in spite of a flattish corp book), (2) SA Accretion (+9% QoQ) was impressive, (3) net stressed assets improved with a jump in PCR (63%, +200bps) and (4) C-I remained stable, despite continued investments. NIMs dipped sequentially to 4.20% but continued to remain healthy.