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Indiabulls Ventures
Kotak Mahindra Bank (Buy)
CMP: ₹1,298.6
Target: ₹1,436
Investments rationale: 1. Strong 3QFY19 results: Kotak Bank reported strong set of 3QFY19 numbers on all counts whereby NII grew by 19 per cent y-o-y to ₹3,805 crore in 3QFY19 as against ₹3,186 crore in 3QFY18 on a bottom-line of ₹1,822 crore in 3QFY19 as against ₹1,618 crore in 3QFY18, a growth of 13 per cent y-o-y.
2. Steep decline in Asset Qualities: Kotak Bank’s asset quality decline steeply by 38 bps on a y-o-y and 10 bps q-o-q TO 0.71 per cent in 3QFY19 as against 1.09 per cent in 3QFY18 and 0.81 per cent in 2QFY19. Its GNPA too declined by 24 bps y-o-y and 8 bps q-o-q to 2.07 per cent in 3QFY19 as against 2.31 per cent in 3QFY18 and 2.15 per cent in 2QFY18.
3. Strong advance growth: Kotak Bank’s advances grew by good 23 per cent y-o-y and 6 per cent on a q-o-q to ₹1,96,432 crore in 3QFY19 as against ₹1,59,071 crore in 3QFY18 and ₹1,84,940 crore in 2QFY19.
Outlook & valuations: Kotak Bank has been consistently growing its loan book above 20 per cent along with its stable asset quality. We feel it is trading at sustainable valuation currently.
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