Edelweiss is bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 1366 in its research report dated April 30, 2018.
Edelweiss' research report on Kotak Mahindra Bank
Kotak Mahindra Bank’s (KMB) Q4FY18 earnings reflected robust performance across business segments. Key positive was sustained upward credit growth momentum (~25% at pre-merger level). Pristine asset quality was maintained—overall stress was curtailed at sub 2.5% levels with credit cost restricted to ~72bps. Commendably, liability franchise continued to strengthen with average SA jumping 58% YoY, leading to CASA ratio of >50%. Furthermore, strong tailwinds buoying financial savings businesses was the icing on the cake (capital market-related businesses clocked >45% earnings growth).
The bank for the first time disclosed EV for its life insurance business (INR58bn, which was significantly higher than street’s expectations) with VNB margin of 29%. Considering this and given strong business profile, we revise our value for life insurance business and consequently revise our SoTP to INR1,366 (INR1,240 earlier). Maintain BUY.
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