Prabhudas Lilladher's research report on Kotak Mahindra Bank
KMB delivered a strong 27% YoY growth in earnings at Rs21.8bn (PLe: Rs14.9bn) which were much above ours and consensus estimates. Strong beat was on back of (i) continued NII traction of 17% YoY despite loan book flattish QoQ & -4% YoY (ii) recovery in fees (iii) higher treasury income (had not booked in Q1FY21) and (iv) substantially lower provisioning than expectations. Strong liability franchise build-up over the years has significantly benefitted funding cost which is now amongst the lowest in the industry, but growth has been quite selective as management continues to outweigh risks to growth. With a strong liability franchise in place, high capital and steady asset quality keeps our view constructive, although balance on loan growth has to improve from here on.
We retain ACCUMULATE with revised TP of Rs1,503 (from Rs1,389) based on 3.1x core Sep-22 BV & Rs293 for subs (rolled over from Mar-22).
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