Kotak Mahindra Bank share price fell a percent in the early trade on January 27 after the company came out with its December quarter number.
The bank has reported a 16.1 percent year-on-year growth in profit at Rs 1,853.5 crore for the quarter ended December 2020, supported by NII and operating profit, but higher provisions restricted profit growth. Profit in the corresponding period was at Rs 1,596 crore.
The net interest income, the difference between interest earned and interest expended, has grown by 16.8 percent to Rs 4,007 crore in Q3FY21 compared to Rs 3,430 crore in the same period last year.
Advances at the end of December 2020 stood at Rs 2,14,103 crore declining 1.2 percent compared to Rs 2,16,774 crore as of December 2019, but reported 4.5 percent sequential growth.
Deposits grew by 10.8 percent YoY and 1.4 percent QoQ to Rs 2,65,304 crore in Q3FY21.
Here are brokerage views on the stock and the company post Q3 numbers:
We value stock on a standalone basis at ~ 4.5x its FY2023E book value and its subsidiaries at ~ Rs 490 per share. The bank’s strong operating metrics, prudent and agile leadership team, well-capitalised balance sheet, as well as quality of its subsidiaries (formidable players in their own segments) provide long-term value to the franchises.
The stock is available at 4.8x/4.3x its FY2022E/FY2023E BVPS. With the recent QIP and capital issue, the bank is placed comfortably with tier-1 capital of 23.6% (standalone) and has the wherewithal for capitalising on opportunities. We recommend buy on the stock with an SOTP-based price target of Rs 2,130.
Kotak Mahindra Bank reported in line numbers with NII and PPoP growing by 17% and 29% respectively. Sequential loan growth of 4.5% YoY surprised positively.
Our earnings upgrade for FY21E is largely led by decline in credit costs, while that for FY22/23E more impacted by operating efficiencies. We maintain our accumulate rating with a revised target price of Rs 1,900 based on 3.9x Dec-22E ABV for the standalone bank and value of subsidiaries, implying a P/ABV of 5.0x.
We expect Kotak Mahindra Bank’s loan book to grow at CAGR of ~ 8.2% over FY20-23E. At CMP of Rs 1,794, the stock is available at 5.6(x) standalone FY22E Adj. BVPS of Rs 322. Valuing the standalone entity with 5.3xFY22E BVPS of Rs 322 and SOTP valuation for subsidiaries and JVs (Rs 288). We recommend a buy in the price range of Rs 1,650 - 1,725 with a price objective of Rs 1,994.
Kotak Mahindra Bank’s standalone PAT of Rs 18.5 bn (PLe: Rs 19.5 bn – miss by 5%) was lower than estimates on back of slightly higher provisions & slower other income. Negative surprise came from the higher slippages of Rs 20 bn with 40% of them contributing from unsecured credit (being cautioned from some quarters by bank) and are mainly +90dpd loans.
While, on restructuring side outcome has been benign with 28 bps of loans much lower than anticipated. SMA-2 also has been slightly up to 30bps of loans but bank holds a COVID provision of Rs 12.8 bn (60bps of loans) which now looks adequate.
Overall operating metrics have been robust with higher NIMs, CASA & PCR, while we watch for further slippages & loan growth. We retain hold with largely unchanged estimates and retain target price of Rs 1,912 and subs value of Rs 356.
Goldman Sachs remained neutral on the stock while raised the target price to Rs 1,986.
It reported a beat with core PPoP growth of 34% YoY, driven by better-than-expected margin with NII beating estimates. NII beat partially offset by slightly higher-than-expected provisions, reported CNBC-TV18.
Research house has kept equal-weight rating with a target at Rs 2,025. The Q3 missed estimates largely due to one-time interest income reversals. The expect asset quality to normalise hereon & focus on loan growth to sustain. The PPoP growth should remain strong, reported CNBC-TV18.
UBS has maintained sell rating and raised the target to Rs 1,700. The management is confident on profitability but positives priced in. We reduces our loan growth in FY21 to 3% from 5% and reduce credit cost estimate to 1.4% from 1.5% earlier.
The currency treasury gains estimate for FY21 & raise FY21/22 EPS estimates by 5.2/7.3%, reported CNBC-TV18.
CLSA has maintained underperform rating with target cut to Rs 1,850 from Rs 2,000. The expectations remain high for the company. It trades at the upper end of its own trading history & 30% premium to HDFC Bank. We lower our valuation of its standalone business from 3.8x to 3.5x, reported CNBC-TV18.
At 09:24 hrs Kotak Mahindra Bank was quoting at Rs 1,785.55, down Rs 8.85, or 0.49 percent on the BSE.
The share touched its 52-week high Rs 2,026.55 and 52-week low Rs 1,000.35 on 30 December, 2020 and 19 March, 2020, respectively.Currently, it is trading 11.89 percent below its 52-week high and 78.49 percent above its 52-week low.