ICICI Direct is bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 1600 in its research report dated May 14, 2020.
ICICI Direct's research report on Kotak Mahindra Bank
Kotak Mahindra Bank (KMB) reported a mixed set of numbers with moderation in advance growth and a steady operational performance. In the wake of Covid-19, the bank has provided for Rs 650 crore, which took a toll on earnings. The overall performance of subsidiaries remained muted. The bank has said that ~26% of borrowers (by value) have opted for moratorium up to April 30, 2020. In lieu of the Covid-19 emergency, the bank has provided Rs 650 crore. Total provisioning for the quarter was at Rs 1047 crore in Q4FY20 (~48 bps of advances) vs. Rs 171 crore in Q4FY19. Surge in provisioning dented PAT by 10% YoY to Rs 1266.6 crore.
We estimate RoA, RoE at 1.6%, 11.7%, respectively, for FY22E. Management strength and sustainability enable BUY rating with target price of Rs 1600, valuing the bank at 3.8x FY22E.
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