KR Choksey has given Buy recommendation for Kotak Mahindra Bank with a target price of Rs. 2340 in its research report issued on May 06, 2022

KR Choksey’s research report on Kotak Mahindra Bank

Net Interest Income (NII) for Q4FY22 increased to INR 45,214 Mn, up 17.7% YoY. Net Interest Margin (NIM) for Q4FY22 was at 4.78%. Net Total Income for Q4FY22 was INR 63,477 Mn, up 9.6% YoY from INR 57,923 Mn in Q4FY21. Operating profit for Q4FY22 was INR 33,399 Mn, from INR 29,622 Mn in Q4FY21. The bank’s PAT for Q4FY22 increased to INR 27,674 Mn, up 29.8% from INR 21,314 Mn for Q3FY22 (INR 16,824 Mn for Q4FY21). Advances increased by 21.3% to INR 27,12,536 Mn as on March 31, 2022, from INR 22,36,886 Mn as on March 31, 2021 (INR 25,29,350 Mn as on December 31, 2021). Overall, Deposits grew 11.3% YoY at INR 31,16,841 Mn as of March 31,2022. As on March 31, 2022, GNPA was 2.34% & NNPA was 0.64%. Capital adequacy ratio of the Bank as per Basel III as of March 31, 2022, was 22.7% and Tier I ratio was 21.7%.

Outlook

We revise our target price to INR 2,340 per share (earlier INR 2,690 per share), using SOTP valuation applying a P/B multiple of 4.5x (5.1x previously) to the FY24E adj. BVPS of INR 467.4 (standalone business) for the bank and INR 236 per share for subsidiaries, leading to an upside of 30.2% over the CMP. We maintain our recommendation at “BUY” on the shares of KMB.

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