Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Research

| More

ADD on Kotak Mahindra Bank - Stronger than most, but expensive - HDFC Securities

Posted On: 2020-05-14 11:46:45


Mr. Darpin Shah, Institutional Research Anayst, HDFC Securities.

Kotak Mahindra Bank (Q4FY20): Stronger than most, but expensive. ADD
(TP Rs 1, 282, CMP Rs 1, 186, MCap Rs 2, 270bn)

KMB's earnings were below estimates, due to high COVID-19 related provisions (a trend seen across banks in 4Q). GNPA growth was contained by the standstill classification. KMB's strong capital base, stable & granular deposit franchise and superior underwriting practices make it one of the best placed in the sector. A fund-raise, while RoAE dilutive, is not undesirable. It would (1) partly resolve the promoter stake issue and (2) further strengthen the bank's already strong b/s. Our ADD rating (TP of Rs 1,282, 3.0x Mar-22E ABV + Rs 294 for subs) reflects expensive valuations.

KMB saw strong deposit growth at 16.4/9.8%, driven by 24.5/14.9% CASA growth. Consequently, the CASA ratio rose 367/247bps YoY/QoQ to 56.2% (highest in the industry). Wholesale (floating rate) SA grew ~19% QoQ but a/c for ~16% of the QoQ increase in SA. Strong SA growth is likely to have been driven by m-share gains as few banks saw a steep decline in deposits in 4QFY20. TD growth was relatively tepid at 3.9% QoQ, and understandable given the strong CASA growth and slow loan growth. While overall deposit growth may slow from the current pace, KMB is likely to gain deposit mshare, as a result of increasing polarisation of deposits.

GNPAs dipped (optically) 7.1% QoQ to Rs 50.3bn (2.25%, +11/-21bps) as slippages were ~54% lower at Rs 4.91bn (90bps ann.). Pursuant to the RBI's Apr-20 circular, slippages and GNPLs were lower by ~Rs 6.6bn. Adj. for this, slippages would've grown ~27/8% to ~Rs 11.5bn (2.1% ann., +30/13bps) and GNPAs would've been ~Rs 56.9bn (~2.6%). Along with the system, KMB is likely to see higher stress. However, due to calibrated growth in unsecured and MSME loans, and better underwriting practices (as suggested by empirical evidence), KMB is likely to perform better than most peers. Our slippage estimates of ~2.4% over FY21-22E are conservative.

Management commentary on COVID-19: (1) 26% of the borrowers (by value) availed moratorium until Apr-20, and the quantum has increased since. A greater proportion of retail loans were under moratorium. (2) The mgt expressed willingness to participate in the recently announced MSME relief package, subject to govt. backing. (3) It expressed caution on sectors such as unsecured personal loans, CV, hospitality, travel and tourism. (4) Specific loan loss provisions, standard asset provisions and other relevant provisions were in excess of KMB's GNPLs. (5) The bank saw material MoM SA growth in Apr-20 and this is a stark departure from usual trends, as the bank sees MoM SA de-growth in Apr. Further, this was despite the recent SA rate cut.

Shares of KOTAK MAHINDRA BANK LTD. was last trading in BSE at Rs.1186.5 as compared to the previous close of Rs. 1159.25. The total number of shares traded during the day was 452068 in over 23942 trades.

The stock hit an intraday high of Rs. 1220.85 and intraday low of 1173.95. The net turnover during the day was Rs. 540757492.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Real Estate (Sector Update) - Greenshoots visible - HDFC Securities

Cement (Sector Update) - Prices, retail sales hold up despite COVID - HDFC Securities

TCI Express - Branch economics, cost levers as margin tailwinds - ICICI Securities

Mishra Dhatu Nigam - Space order inflow may slow down in FY21 - ICICI Securities

Century Plyboards - Compelling BUY; top pick in building materials - ICICI Securities

Building material - Sector Update - ICICI Securities

ISGEC Heavy Engineering - On a strong footing despite macro headwinds - ICICI Securities

Telecom - Growth breaks due to Covid-19 crisis - ICICI Securities

Pfizer Ltd - Company Update - ICICI Securities

Petronet LNG - Quant Pick - ICICI Securities

Earnings Wrap Q4FY20: Quarter end lockdown takes toll, one-offs rule Q4FY20

Autos & Transportation Sector Update Report - Focus on '3Cs' - HDFC Securities

Banking Sector Credit Trends - Weakness building - HDFC Securities

India Equity Strategy Report - Back to pre-covid levels - HDFC Securities

Strategy: Cyclicals to lead earnings recovery over FY20-22 - ICICI Securities

JK Cement - Ripe for re-rating - ICICI Securities

Phillips Carbon Black - Company Update - ICICI Securities

Information Technology - Q1FY21 Result Preview - ICICI Securities

Motherson Sumi Systems Ltd - Company Update - ICICI Securities

HDFC Ltd - Quant Pick - ICICI Securities

Auto Sales Data for June 2020 - Angel Broking

FMCG - Sector Review 4QFY20 - Disruption visible, growth divergence increases - HDFC Securities

Maintain ADD on ONGC - Impairment loss drags earnings - HDFC Securities

Maintain BUY on Ahluwalia Contracts - Looking ahead - HDFC Securities

RIL-Intel Deal - Angel Broking

Strategy: 'Out of turn' change in NIFTY50 due to Vedanta delisting - ICICI Securities

Time Technoplast - Q4FY20 Result Update - ICICI Securities

Monthly Auto Volumes - July 2020 - ICICI Securities

Oil & Natural Gas Corporation - Q4FY20 Result Update - ICICI Securities

Minda Industries - Q4 FY20 Result Update - ICICI Securities

Auto Sales - June 2020 - Acuité Ratings & Research

Bharat Electronics - Q4FY20 Result Update - ICICI Securities

Petronet LNG - Q4FY20 Result Update - ICICI Securities

Tata Steel - Q4FY20 Result Update - ICICI Securities

Phoenix Mills - Q4FY20 Result Update - ICICI Securities

Jun-20 Volumes expectations: Sales to rise over 2x from May-20 levels for Hero, Maruti - HDFC Securities

Maintain REDUCE on RBL Bank - Risks more evident - HDFC Securities

Maintain ADD on Subros - Expect market share gains to continue - HDFC Securities

Maintain ADD on Petronet LNG - One offs in opex drag profitability - HDFC Securities

Siyaram Silk Mills - Company Update - ICICI Securities

Vardhman Textiles - Company Update - ICICI Securities

Bharat Forge - Q4FY20 Result Update - ICICI Securities

CESC - Q4FY20 Result Update - ICICI Securities

Star Cement - Company Update - ICICI Securities

BUY on GIC Reinsurance - Arduous Road Ahead - HDFC Securities

ADD on Oil India - Excess provisions drag EBITDA - HDFC Securities

Maintain BUY on Sobha - Well placed for recovery - HDFC Securities

Maintain REDUCE on Emami - Miss on all fronts - HDFC Securities

BUY on Galaxy Surfactants - Higher per unit EBITDA leads profitability - ICICI Securities

Maintain BUY on J. Kumar Infraprojects - Migration headwinds - HDFC Securities







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019