ICICI Direct recommended Hold rating on Kotak Mahindra Bank with a target price of Rs 1700 in its research report dated October 23, 2019.
ICICI Direct's research report on Kotak Mahindra Bank
Kotak Mahindra Bank reported a strong set of numbers. The operational performance continued to remain healthy at Rs 2509 crore, up 20% YoY on the back of healthy NII growth & stable core fee income. Net interest income (NII) was at Rs 3350 crore, up 24.6% YoY due to an improvement in margins of 41 bps YoY at 4.61%. Other income was flat YoY at Rs 124 crore. Benefit from lower tax rate was more than enough to offset higher provisions on advances of ~Rs 398 crore. Accordingly, PAT was at Rs 1724 crore, up 51% YoY. Overall asset quality broadly remain stable with GNPA ratio at 2.32% (13 bps increase) & NNPA ratio at 0.85% (12 bps increase).
Value enrichment remains positive with contribution at 28%. Hence, we maintain HOLD with a revised TP of Rs 1700, based on SOTP valuation. Outcome of tussle between bank and RBI continues to remain key monitorable.
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