Buy Kotak Mahindra Bank; target of Rs 2040: ICICI Direct

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ICICI Direct's research report on Kotak Mahindra Bank

Kotak Mahindra Bank reported a good set of numbers on the operating front with profitability aided by healthy margins and controlled cost. Sequential pick-up in loan book is a positive and was in line with the management’s intent to pedal growth from here on. The bank reported steady NII growth of 16.8% YoY on the back of a sequential improvement in NIM for Q3FY21. NIM improved 6 bps on a sequential basis to 4.58% owing to lower cost of funds. Other income was flattish YoY due to sluggish fee income growth of 3% YoY and lower treasury gain. C/I ratio declined ~790 bps YoY but was up ~380 bps QoQ to 42.3% as promotional, advertisement expenses increased with increasing business activity. The bank made provisions worth Rs 599 crore, up 62% QoQ, including interest reversal in lieu of stressed assets. PAT, on the back of healthy operating performance, increased 16.1% YoY to Rs 1853 crore

Outlook

We upgrade our rating on the stock from HOLD to BUY with a revised SOTP target price of Rs 2040 (Rs 1950 earlier).

For all recommendations report, click here

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