Prabhudas Lilladher's research report on Kotak Mahindra Bank
Kotak Mahindra Bank (KMB) saw a strong quarter as PAT at Rs35bn beat PLe by 26%, largely led by lower opex due to change in pension annuity rates and QoQ normalization of one-time promotional expenses. While loan growth was a miss at 18% YoY (PLe 21%), NIM was a beat 5.86% (PLe 5.58%) as sequential credit flow (2.9%) was mainly in favour of higher yielding non-housing retail (+7.6%). Traction continues in superior margin segments and bank is on course to achieve its guidance (unsecured share to mid-teens in FY24E) as mix of PL/CC/MFI has consistently risen over FY22 to FY23 from 6.8% to 9.9%. Share of granular deposits (<Rs50mn) in quarterly flow was better.
Outlook
We remain optimistic on KMB as balance sheet construct is improving, which would cushion margins. Valuation is at 2.9x; maintaining multiple at 3.5x, we roll forward to Mar’25 core ABV and raise SOTP based TP to Rs2,220. from Rs2,100. Retain ‘BUY’.
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