Sharekhan has given Buy recommendation for Kotak Mahindra Bank with a target price of Rs. 2250 in its research report issued on May 04, 2022
Sharekhan’s research report on Kotak Mahindra Bank
KMB reported PAT at Rs. 2,767 crore, above street expectations (+23%) due to lower core credit cost reported at 27 bps (excl COVID reversals) vs. 35 bps in Q3FY2022. Contingent provision write-back stood at Rs. 453 crore. PAT grew by 64%y-o-y/30% q-o-q. Asset quality improved q-o-q, with GNPA and NNPA declining by 37 bps/15 bps q-o-q to 2.34%/0.64%, respectively. SMA 2 book stood at Rs.186 crore vs. Rs. 298 crore in Q3FY2022. Core credit cost for FY2022 was 55 bps. Strong momentum was seen in advances, which grew by 21% y-o-y/7% q-o-q (higher than larger peers), led by retail and SME portfolio. Deposits grew by 11% y-o-y vs. 15% in Q3FY2022.
We maintain our Buy rating with an SOTP-based PT of Rs. 2,250. The bank is positioned well to grow exponentially after conservatively containing itself in the past as credit demand picks up coupled with strong low-cost liability franchise and improving asset-quality matrix.