Buy Kotak Mahindra Bank; target of Rs 2125: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 2125 in its research report dated July 21, 2024.

Broker Research

July 23, 2024 / 12:11 IST

Buy

26 Aug, 2025 12:21

Volume

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Prabhudas Lilladher's research report on Kotak Mahindra Bank

KMB saw a weak quarter. While core PPoP was in-line, NIM and fees declined QoQ, offset by lower opex. Rise in credit costs led to 2.7% miss on core PAT. Higher loan growth was led by lower yielding segments of housing and corporate. While better liquidity management helped protect NIM, we do not see any further balance sheet headroom to support NIM. Due to RBI embargo on digital onboarding, 2-3 weeks were spent on shifting from digital to physical modes, which impacted unsecured loan growth (+1.8% QoQ vs recent peak of 10%). However, substantial progress has been made in technology improvement, although no timeline has been provided for likely removal of the ban.

Outlook

As low-ticket unsecured loans are showing signs of overleveraging, we increase provisions by 6-7bps for FY25/26E, which would be offset by lower opex. We tweak multiple from 2.5x to 2.4x on core FY26 ABV and slightly raise TP to Rs2,125 from Rs2,100. Retain ‘BUY’.

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