Buy Kotak Mahindra Bank; target of Rs 2040: ICICI Direct

ICICI Direct is bullish on Kotak Mahindra Bank has recommended buy rating on the stock with a target price of Rs 2040 in its research report dated May 04, 2021.

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ICICI Direct’s research report on Kotak Mahindra Bank

Kotak Mahindra Bank reported a mixed set of numbers on the operating front while credit growth trajectory on a sequential basis was maintained. Kotak Bank posted lower-than-expected NII growth at 8.0% YoY to Rs 3842 crore, mainly on account of 34 bps YoY and 19 bps QoQ decline in net interest margins. The bank took a hit of ~Rs 110 crore in NI line for relief on interest on interest. Non-interest income (NII) reported a sharp jump of 31% YoY, 51% QoQ to Rs 1949 crore, driven by 23% QoQ rise in fee income and treasury gains (PBT level) of Rs 898 crore vs. Rs 48 crore QoQ. Cost to income ratio declined ~258 bps YoY with 9.4% QoQ reduction in employee expenses due to lower retirement benefits due to improved interest rates. The bank made elevated provisions worth Rs 1179 crore, up 181% QoQ. Thus, PAT came in at Rs 1682 crore, slightly below our estimates.

Outlook

We maintain our BUY rating with an SOTP target price of Rs 2040 (unchanged).

For all recommendations report, click here

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