Kotak Mahindra Bank Q4: Kotak Mahindra Bank’s share price surged nearly 2 per cent in morning trade on May 5, a day after the company reported its March quarter earnings. The private lender reported a net profit of Rs 2,767 crore in the March quarter of FY22, up 64.5 per cent year-on-year (y-o-y), on the back of strong growth in loans and net interest income (NII), and provision write-backs.
KMB’s NII — the difference between interest earned and interest expended — rose 18 per cent y-o-y to Rs 4,521 crore, and its net interest margin (NIM), a key measure of profitability, rose 16 basis points (bps) sequentially to 4.78 per cent.
Customer assets, which include advances and credit substitutes, stood at Rs 2.92 trillion as on March 31, up 23 per cent y-o-y. Advances as on March 31 were at `2.71 trillion, up 21 per cent y-o-y.
Kotak Mahindra Bank – Should You Buy, Hold or Sell?
Yes Securities said: “There are some factors supporting NIM including the fact that KMB will rachet up SA growth. Additionally, unsecured retail is a small proportion of overall loan book and its share should rise. Also, the fixed-rate loan book is a relatively small part of the overall loan book. At the same time, despite a loan growth of 21 per cent YoY, capital adequacy has inched up on YoY basis. The bank sees this as an opportunity to enhance market share, while adhering to risk-adjusted pricing. Management stated that there could be a contraction of 10-15 bps in NIM, presumably from the elevated quarterly level of 4.78 per cent. Management also stated that 4.78 per cent is an “exceptional” margin and a margin of 4.3-4.6 per cent would be regarded as healthy for a bank growing at the pace of KMB.
“We maintain an ‘Add’ rating on KMB with a revised price target of Rs 2023: We value the consolidated bank at 3.7x FY23 P/BV for an FY23E/24E RoE profile of 12.6/13.4 per cent,” Yes Securities.
Research firm Morgan Stanley has kept an equal-weight rating on Kotak Mahindra Bank reflecting valuation and relative risk-reward. It kept a target of Rs 1,965 per share. The profit was 19 per cent above estimate on lower credit costs, while core PPoP was in line with estimates. Loan growth acceleration remains on track.
Broking house CLSA has maintained a buy rating on the stock with a target at Rs 2,200 per share. There was strong growth and NIM performance. The asset quality continues to improve, leading to provision reversals. Liability mobilisation will need to rise significantly to fund loan growth.
Brokerage firm Jefferies has maintained buy rating on Kotak Mahindra Bank with a target at Rs 2,600 per share. The profit was above estimates aided by writeback of credit costs & higher other income. The NII growth was healthy & in line with our estimates with robust asset quality.
“Kotak Mahindra Bank delivered a healthy core operating performance and broad-based loan growth. NIM inched up further sequentially and is at the higher end of the range in recent years. The bank continues to demonstrate steady progress in building a strong liability franchise, with CASA ratio standing ~61per cent (highest in the industry). We maintain our neutral rating with a target price of Rs 2,000/share (3.1x FY24E ABV + Rs 587 for its subsidiaries),” Jefferies said.
Read all the Latest Business News here
Comments
0 comment