Q3FY21 Result Update - Kotak Mahindra Bank - ICICI Direct

Kotak Mahindra Bank reported a good set of numbers on the operating front with profitability aided by healthy margins and controlled cost. Sequential pick-up in loan book is a positive and was in line with the management's intent to pedal growth from here on. The bank reported steady NII growth of 16.8% YoY on the back of a sequential improvement in NIM for Q3FY21. NIM improved 6 bps on a sequential basis to 4.58% owing to lower cost of funds. Other income was flattish YoY due to sluggish fee income growth of 3% YoY and lower treasury gain. C/I ratio declined ~790 bps YoY but was up ~380 bps QoQ to 42.3% as promotional, advertisement expenses increased with increasing business activity. The bank made provisions worth Rs. 599 crore, up 62% QoQ, including interest reversal in lieu of stressed assets. PAT, on the back of healthy operating performance, increased 16.1% YoY to Rs. 1853 crore.

Valuation & Outlook

KMB's long term focus continues on maintaining risk adjusted returns. Pick up in loan book is a positive and in line with the management's indication to push for growth. Adequate provision provides comfort to deal with volatility in asset quality and, thus, earnings. The bank's focus on improving liability franchisee makes it attractive. Consistent performance over a period of time, healthy return ratios and capable management are reasons for premium valuations. We upgrade our rating on the stock from HOLD to BUY with a revised SOTP target price of Rs. 2040 (Rs. 1950 earlier).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_KotakBank_Q3FY21.pdf

Shares of KOTAK MAHINDRA BANK LTD. was last trading in BSE at Rs.1766.7 as compared to the previous close of Rs. 1795.15. The total number of shares traded during the day was 210818 in over 18509 trades.

The stock hit an intraday high of Rs. 1823.05 and intraday low of 1747.3. The net turnover during the day was Rs. 375578626.

Source : Equity Bulls

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