Buy Kotak Mahindra Bank; target of Rs 2100: Sharekhan

Sharekhan is bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 2100 in its research report dated October 19, 2024.

Broker Research

October 21, 2024 / 10:47 IST

Buy

Sharekhan's research report on Kotak Mahindra Bank

KMB reported a weak performance in Q2FY2025 although on expected lines led by NIM contraction, weak business momentum, and higher slippages in turn led to uptick in credit cost. Higher slippages were mainly from unsecured retail – credit cards and MFI segment. Stress has emerged in the old vintage book and would take 2-3 quarters to settle. The bank had already calibrated the risk framework in the unsecured segment last year and recent vintages continue to perform well. The bank has guided that it is on track to improve on the tech front, but timelines relating to overall submission to the RBI regarding lifting the embargo are still unclear. We remain constructive from a medium to long-term perspective.

Outlook

We maintain BUY with a revised SOTP-based PT of Rs. 2,100, as the contribution of subsidiaries to the overall profitability has increased resulting into higher sub. value in our SOTP calculation. The stock is trading at 2.2x/1.9x its FY2025E/FY2026E core BV estimates.

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