Reported Robust Business Growth, PAT Grew 27% YoY, Buy Stock For 18% Returns, Says ICICI Direct

In its most recent report, ICICI Direct recommends "Buy" for Kotak Mahindra Bank with a target price of Rs. 2,250. If purchased at the current market price while taking the estimated target price into account, the stock is expected to gain 18% in 12 months. With a market cap of Rs 3,739.58 crore, it is a large-cap banking company.

Kotak Mahindra Bank (KMB) is a powerful banking franchise, with promoter stake at ~26% and strong promoter led management. It has a presence across the financial services value chain. CASA forms ~56% of total deposits aiding lower costs. Strong RoA of ~2% and RoE of 11-12% makes it a good profitable bank.

CMP, 52-week low & high, and Returns Over The Years

The Current Market Price (CMP) of stock is Rs 1,896.85 per share on NSE, it was opened at Rs 1,911 per share. Its 52 week low level is Rs 1,631 and the 52 week high is Rs 2,253, respectively. Its ROE is 12.50%. 

 
The stock in a week has given 1.45% positive return. In a month, it has given 1.28% positive return. Over a year, the stock fell 12.43%, giving a negative return. The stock in the past 3 years has given 18.77% positive returns. Whereas, in the past 5 years it gave a massive 86.71% positive returns. 

Q2FY23 Results

According to the brokerage the bank reported Robust business growth and operational performance. Advances up 25.1% YoY to 2.94 lakh crore, deposits up 11.5% YoY. NII growth at 26.8% YoY, NIMs expand 25 bps QoQ to 5.17%. Credit cost at 26 bps. PAT grew 27% YoY, 25% QoQ at Rs 2580 crore. GNPA declined 16 bps QoQ to 2.08%; Net slippages at 0.2% of advances

Buy for a target price of Rs 2250

KMB's share price has grown by 18% over the past three years. Pedalling growth along with diversified asset mix with focus on risk adjusted margins to aid earnings and keep asset quality steady. "We maintain BUY rating on the stock. We value standalone bank at ~3.75x FY24E ABV and subsidiaries at ~Rs 488 post holding company discount giving SOTP target of Rs 2250," the brokerage has said.

Key triggers for future price performance

• Continued growth momentum across key areas to drive business growth.
• Business growth, repricing of rates and shift to high yielding segments to aid margins; though deposit accretion at reasonable cost remains key.
• Provision buffer coupled with steady asset quality to keep credit cost lower.
• Gradual increase in contribution of subsidiaries to add to consolidated valuation.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.