1
Please refer to important disclosures at the end of this report
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1
Kotak Mahindra Bank provides a full suite of banking services to its
customers encompassing Retail Banking, Treasury and Corporate Banking in
India and also has a representative office in Dubai.
The bank is known for its well managed asset quality. As of 1QFY20, its
GNPA stood at 2.19% marking a marginal rise of 2bps yoy and 5bps qoq.
Along with this, its PCR is also improving each quarter. At the end of
1QFY20, PCR stands at 67% vs 60.8% in 1QFY19. The improving asset
quality is reflected on the operational front also. Kotak’s 50% of the deposits
is constitutes CASA, which helps it maintain lowers interest expenses.
Therefore, in the latest reporting quarter NIM widened by 21bps to 4.5%.
With a branch network of 1503 branches, focus on retail segment, KMB
plans to drive credit growth. Deposit base was at `2,32,931 crore as of
Q1FY20 with CASA ratio of 50.7%, best in industry. Going ahead, it is
poised to pedal credit growth focusing on retail and better rated corporate.
The stock is currently trading at 4.8x of its book value, which is at a lower
side when compared to a high of 5.2x in the last one year. The bank
generates an ROE of 13.2%. Considering Kotak’s superior NIMs, strong
CASA, a well-capitalized balance sheet and their ability to maintain a healthy
asset quality over others this valuation looks justified. Hence BUY.
BUY
CMP `1,484
1.0
Reuters Code
KTKM.BO
KMB IN
5
BSE Sensex
38,736
Nifty
11,553
Face Value (`)
Bank
Market Cap (` cr)
2,83,415
52 Week High / Low
1556/1002
Avg. Daily Volume
1,49,440
Jaikishan Parmar
022 – 3935 7600 Ext: 6810
[email protected]
Kotak Mahindra Bank Ltd
Others |Bank
July 12, 2019
2
Kotak Mahindra Bank Ltd| Bank
2
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Kotak Mahindra Bank Ltd
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)