Prabhudas Lilladher has given Accumulate recommendation for Kotak Mahindra Bank with a target price of Rs. 2100 in its research report issued on Oct 23, 2022
Prabhudas Lilladher’s research report on Kotak Mahindra Bank
KMB saw a steady quarter as core earnings were in-line while asset quality improved due to controlled slippages. As expected, loan growth was 25% YoY while NIM was higher by 5bps at 5.11% owing to better yields that was a function of strong growth in SME and retail attributable to traction in HL, PL/CC and vehicle. Corporate growth was muted due to competition led mispricing which was partly offset by growth in credit substitutes. Focus would be on higher yielding retail which may keep opex elevated and target is to scale up unsecured share from 8.7% to early-mid teens. Deposit growth of 2.8% QoQ was impacted by SA blip due to outflow from HNI & affluent segment although TD accretion was 7.5% QoQ.
Outlook
KMB is comfortable with a LDR of 90%. We slightly tweak our earnings for FY23/24/25 baking in higher NII and opex. Rolling forward to Sep’24 core ABV we maintain multiple at 3.6x and raise SOTP based TP from Rs1,950 to Rs2,100. Retain ACCUMULATE .