Dolat Capital recommended accumulate rating on Kotak Mahindra Bank with a target price of Rs 1450 in its research report dated July 28, 2020.
Dolat Capital's research report on Kotak Mahindra Bank
KMB reported a healthy operating performance with NII and core PPoP growing at 17% YoY each. Nil treasury gains impacted overall PPoP. Loan growth declined YoY by 2% (7% QoQ) and has been a key dampener for NIM (down 30 bps QoQ), apart from surplus liquidity. Moratorium at 9.7% declined from 26% in April-end, where the bank has extended moratorium 2.0 only to fundamentally viable customers, 80% of which are secured. Total COVID-19 related provisions stood at 0.6% of advances for the bank. Despite weak loan growth, continued moderation in CoF supports NII growth. Given the comfort on CoF, growth should not be a challenge for the bank eventually. KMB’s conservative stance on lending and strong risk practices should result in relatively lower asset quality risks in our view.
However, valuations look rich. We maintain ACCUMULATE rating with an unrevised TP of Rs1,450 based on 3.3x FY22E ABV for the standalone bank
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