Mar 04, 2013, 01.20 PM IST | Source: Moneycontrol.com

Buy Kotak Mahindra Bank; target Rs 727: Firstcall Research

Firstcall Research is bullish on Kotak Mahindra Bank and has recommended buy rating on the stock with a target price of Rs 727 in its March 01, 2013 research report.

Firstcall Research is bullish on Kotak Mahindra Bank and has recommended buy rating on the stock with a target price of Rs 727 in its March 01, 2013  research report.

"Kotak Mahindra Bank is Centralized Banking Solution enabled and the first nonbanking finance company to receive a baking license from the RBI. Kotak Mahindra Bank has acquires the business loans portfolio from Barclays Bank PLC, India Branch. Kotak Investment Banking, alliance with SMBC and SMBC Nikko will play an active role in the growing cross-border M&A activity between India and Japan. Kotak Mahindra Bank revises Savings Bank Interest Rate. Balance above Rs. 1 Lakh - 6.00% p.a and below5.50% p.a. with effect from 1st November CASA and TDs below Rs. 50 million constitute 54.7% of total deposits. Kotak has added around Rs 2.1 lakh’s customer accounts for the quarter. Kotak Mahindra Bank has made once again in the list of the prestigious Forbes Asia’s Fab 50 Companies in 2012 for the 3rd consecutive year 2010-12. Net Income and PAT of the company are expected to grow at a CAGR of 28% and 17% over 2011 to 2014E respectively.

The bank continues to show strong performance in terms of growth of Net Interest Income, Fee Income and Operating Revenue. The group has posted net profit of the Rs. 5857.80 million against Rs. 4662.23 million in the corresponding quarter ending of previous year, an increase of 25.64%. Net Income for the quarter rose 26.48% to Rs. 28114.70 million from Rs. 22227.92 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 7.76 a share during the quarter, registering 23.99% an increase over previous year period.

Outlook and Conclusion: At the current market price of Rs. 655.00, the stock P/E ratio is at 21.96 x FY13E and 18.95 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 29.83 and Rs.34.57 respectively. Net Income and PAT of the company are expected to grow at a CAGR of 28% and 17% over 2011 to 2014E respectively. On the basis of Debt-Equity Ratio, the stock trades at 5.00 x for FY13E and 4.71 x for FY14E. Price to Book Value of the stock is expected to be at 3.23 x and 2.77 x for FY13E and FY14E respectively. Buy the stock with a target price of Rs 727," says Firstcall Research report.

Non-Institutions holding more than 90% in Indian cos

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