Buy Kotak Mahindra Bank; target of Rs 2230: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on Kotak Mahindra Bank

KMB saw a strong quarter with beat on all fronts as loan growth, NIM, opex and asset quality were better. Hence core PPoP beat PLe by 3.0%; core PAT was inline at due to higher provisions driven by increase in PCR by 175bps QoQ to 73% which was a positive. Sequential loan growth was broad based but healthy at 3.6% QoQ considering (1) RBI embargo is still effective (2) acquisition of StanChart’s PL portfolio of Rs41bn is yet to be accounted (likely in Q4FY25) and (3) system credit accretion is weakening. Slippage ratio declined QoQ from 199bps to 176bps due to lower delinquencies in secured. Stress formation is reducing in PL, stable in CC but increasing in MFI.

Outlook

We increase core PAT for FY26/27E by 1.6%/3.8% due to better loan offtake and lower opex. While target multiples across the system may contract due to a tough macro environment, we maintain multiple for KMB at 2.4x on core Sep’26 ABV due to stronger balance sheet and earnings quality. Retain TP at Rs2,230 and reiterate ‘BUY’.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Kotak Mahindra Bank - 20012025 - prabhu