Buy Kotak Mahindra Bank; target of Rs 2150: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Kotak Mahindra Bank

Net Interest Income (NII) for Q3FY24 increased to INR 65,535 Mn, up 15.9% YoY (+4.1% QoQ). NII was in line with our estimates. Net Interest Margin (NIM) for Q3FY24 was 5.22% against 5.47% in Q3FY23, a decline of 25 bps YoY (flat on a QoQ basis). For 9MFY24, the NII grew by 23.5% to INR 190,839 Mn. • Pre-Provision Operating Profit (PPOP) for Q3FY24 was INR 45,662 Mn, a growth of 18.6% YoY (-1.0% QoQ). The PPOP was 6.3% lower than our estimates owing to higher-than-expected costs during the quarter. In 9MFY24, PPOP stood at INR 141,259 Mn, a jump of 38.5% YoY. • The Bank’s PAT for Q3FY24 stood at INR 30,050 Mn, an increase of 7.6% YoY (-5.8% QoQ). The net profit reported a 10.8% lower against our estimates on the back of higher provisions and lower operating profits. PAT for 9MFY24 was INR 96,483 Mn, a growth of 29.6% YoY. • As of December 31, 2023, GNPA was 1.73% as against 1.72% as of September 30, 2023, and NNPA was 0.34% as against 0.37% as of September 30, 2023. The provision coverage ratio stood at 80.6%, an improvement of 299 bps YoY (+150 bps QoQ). • The capital adequacy ratio of the Bank as per Basel III as of December 31, 2023, was 21.2%, and the Tier I ratio was 20.7%.

Outlook

We have introduced FY26E estimates and accordingly rolled over our valuation to FY26E Adjusted Book Value. We revised our target price to INR 2,150 per share (earlier INR 2,130), using SOTP valuation and applying a P/B multiple of 3.1x to the FY26E adj. BVPS of INR 638.0 for the standalone business and INR 173 per share for subsidiaries, leading to an upside of 20.5% over the CMP. We maintain our recommendation of "BUY" on the shares of KMB.

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Kotak Mahindra Bank - 24012024 - kr