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Research
Kotak Mahindra Bank - Q1FY21 Result Update - ICICI Securities
Posted On : 2020-07-29 11:30:50( TIMEZONE : IST )
Kotak Mahindra Bank reported a mixed set of numbers wherein a reduction in the moratorium book and healthy CASA growth were the silver lining while moderation in growth and dip in asset quality (despite moratorium) were dampeners. The overall performance of subsidiaries was healthy. As on June 30, 2020, the bank reported ~9.65% of Moratorium 2.0 book, which was a sharp reduction from Moratorium 1.0 level of ~26%. The bank reported that ~95% of Morat 2.0 book is attributable to Morat 1.0 with ~80% of Morat 2.0 book being secured. The bank has provided Rs. 616 crore for Covid-19 during the quarter. Provisioning towards advances was at Rs. 353 crore. Provision came at Rs. 962 crore in Q1FY21 (~47 bps of advances) vs. Rs. 1047 crore in Q4FY20. As on June 30, 2020, the bank has maintained Covid provisions worth Rs. 1266 crore (~62 bps of advances).
Valuation & Outlook
KMB's long term focus continues on maintaining risk adjusted returns but given economic headwinds, we expect growth to no longer stay in limelight amid Covid. In terms of promoter overhang, the board recently approved renewal for Uday Kotak, Dipak Gupta for three years from January 2021 but RBI approval for the same is awaited. Cautious extension of moratorium based on customer profile provides comfort for delinquency shocks post moratorium period. KMB has been a consistent performer over the years, driven by reasonable RoE, high RoA ratios & strong margin profile. Hence, premium valuations for management strength, sustainability. We maintain BUY rating with TP of Rs. 1600, valuing at 3.9x FY22E.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_KotakBank_Q1FY21.pdf
Shares of KOTAK MAHINDRA BANK LTD. was last trading in BSE at Rs.1382.75 as compared to the previous close of Rs. 1322.45. The total number of shares traded during the day was 220715 in over 11367 trades.
The stock hit an intraday high of Rs. 1401.1 and intraday low of 1321.9. The net turnover during the day was Rs. 301780491.
