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Kotak Mahindra Bank share price gained in the early trade on November 26 despite broking house Motilal Oswal downgrading the stock as the risk-reward is unfavorable after the sharp outperformance.
The sharp outperformance in the stock (aided by MSCI inclusion) when seen in the context of growth outlook and return ratios (average RoE of 12.7 percent over FY21-23E) drives us to downgrade our rating to neutral, said Motilal Oswal.
It revised the target price to Rs 1,800 per share.
The company has delivered a 32 percent return since Oct’20 upgrade, resulting in a sharp expansion in trading multiples to 4.2x FY22E ABV – a 17% premium to its five-year average trading multiple, it added.
The management expects an improvement in asset growth after doing an exemplary job in building a robust liability franchise, while Motilal Oswal expect loan growth to sustain at 12 percent CAGR over FY21-23E.
At 09:18 hrs, Kotak Mahindra Bank was quoting at Rs 1,869.90, up Rs 7.45, or 0.40 percent on the BSE.
The share touched its 52-week high Rs 1,947.70 and 52-week low Rs 1,000.35 on 24 November, 2020 and 19 March, 2020, respectively.
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