Edelweiss bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 1421 in its research report dated July 19, 2018.
Edelweiss' research report on Kotak Mahindra Bank
Kotak Mahindra Bank’s (KMB) Q1FY19 consolidated earnings (excluding insurance) came in lower than estimate due to miss in profitability of the banking business. Despite steady asset quality, provisions came in higher due to: a) investment depreciation hit; and b) rising coverage in SME segment (management sees system-wide issue with collateral valuation and is thus strengthening coverage). Meanwhile, credit growth momentum was sustained (~24%). Liability franchise continued to strengthen with average SA jumping 59% YoY, leading to CASA ratio of >50%. Performance of non-banking businesses was on expected lines.
We believe, KMB has laid a strong foundation—liability franchise, digitisation, capital position and limited stress hit—for a scalable and profitable model. Maintain ‘BUY’.
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