CLSA initiates with outperform on Kotak post integration of ING

Moneycontrol Bureau

CLSA has initiated coverage on Kotak Mahindra Bank with an outperform rating and target price of Rs 770, citing robust asset quality and return on assets post integration of ING Vysya Bank. The stock gained more than 1 percent.

After a year spent integrating ING Vysya Bank (INGV), Kotak has reached the inflection point from which it should start to realise opportunities, the brokerage said, adding the potential to leverage synergies with the existing strong franchise could drive strong earnings growth over two years.

According to its note, a robust asset quality and return on assets (ROA) as well as leverage expansion will take return on equity to 15 percent by FY18, or 17-18 percent in an optimal scenario.Risks are primarily from integration delays, it feels.