Markets

Broker's Call: Kotak Mahindra Bank (Buy)

| Updated on February 12, 2019 Published on February 13, 2019

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.

Published on February 13, 2019
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