Dolat Capital is bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 1450 in its research report dated May 14, 2020.
Dolat Capital's research report on Kotak Mahindra Bank
While KMB’s PPoP growth was healthy at 19% YoY led by stable NIM and healthy sequential growth in other income, PAT was impacted by Rs6.5bn of COVID related provisions. Higher CASA ratio and decline in SA deposit rates resulted in ~45 bps QoQ decline in CoF, aiding NIM of 4.7% despite a 700 bps decline in Loan-deposit ratio. We continue to like KMB for its strong liability franchise with improving CoF, conservative lending approach, strong subsidiaries, and healthy capital position. Despite lowering growth estimates and doubling of slippages in FY21E, improving CoF and strong PPoP profile support RoA of 1.6%.
We maintain our BUY rating with a TP of Rs1,450 based on 2.8x FY22E ABV (standalone bank) and the value of its subsidiaries, implying a FY22E P/ABV of 4.7x.
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