Kotak Mahindra Bank Q3 review: Should you buy, sell or hold the stock?


Kotak Mahindra Bank, on Monday, reported a jump of 23% year-on-year in its net profit for December quarter at Rs 1,291 crore. The lender had posted a profit of Rs 1,053 crore during the same quarter of last year.

Analysts largely remain positive on Kotak Mahindra Bank’s Q3 performance, but believe that its subsidiaries show was a key negative. They remain upbeat on the banking business.




Kotak Mahindra Bank, on Monday, reported a jump of 23 percent year-on-year in its net profit for December quarter at Rs 1,291 crore. The lender had posted a profit of Rs 1,053 crore during the same quarter of last year.

The net interest income (NII), the difference between interest earned and expended, grew 23 percent YoY at Rs 2,939 crore from Rs 2,394 crore last year.

The net interest margin rose to 4.33 percent from 4.20 percent in the previous quarter.
On the asset quality front, gross non-performing assets (NPAs) rose to Rs 4,128.68 crore from Rs 4,033.07 crore last quarter. The net non-performing assets fell to Rs 1,397.27 crore from Rs 1,500.76 crore in the previous quarter.

The gross NPA ratio also fell to 2.07 percent from 2.15 percent in December quarter. 

Meanwhile, net NPA ratio, too, declined to 0.71 percent from 0.81 percent.



Provisions saw a write-back of Rs 32.3 crore from provisions of Rs 353.8 crore last quarter.

Brokerage: CLSA | Rating: Buy | Target: Rs 1,500

CLSA said that it sees 21% CAGR in its standalone earnings. The key positive from results was 23 percent growth in net interest income (NII), led by 23 percent rise in loans. Better growth and RoE improvement remains key in sustaining premium valuations.

Brokerage: Deutsche Bank | Rating: Buy | Target: Reduced by 2 percent to Rs 1,410

The brokerage highlighted that a key negative was a fairly weak subsidiary performance. This trend could continue in near term. It has raised estimates for banking business, but reduced consolidated estimates by over 4 percent for FY19/20.

Brokerage: Axis Cap | Rating: Hold | Target: Rs 1,350

Axis Capital said that the lender reported strong Q3 on robust NII growth and better asset quality. It said that the bank model had a well-managed balance sheet with superior risk management. It does not see any significant upside from current levels.

Brokerage: Credit Suisse | Rating: Neutral | Target: Rs 1,230

The global research firm observed that the standalone PAT was healthy, but subsidiaries’ profit declined. With Tier-1 capital strong At 18.3%, growth is likely to remain healthy. It expects return on equity to improve to 15 percent in FY20.

Read more : wealth research

Reference : www.moneycontrol.com

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