Here's what brokerages have to say about Kotak Mahindra Bank post Q4 results
Kotak Mahindra Bank reported a 64.5 per cent year-on-year jump in standalone net profit at Rs 2,767 crore for the quarter ended 31 March. 2022.
- May 5, 2022,
- Updated May 5, 2022 2:51 PM IST
Shares of Kotak Mahindra Bank (KMB) were trading higher after the bank reported better than expected earnings for the quarter ended March 2022.
Kotak Mahindra Bank reported a 64.5 per cent year-on-year (YoY) jump in standalone net profit at Rs 2,767 crore for the quarter ended 31 March. 2022. The private lender had reported a net profit of Rs 1,682 crore in the year-ago period.
The lender's net interest income (NII) for Q4FY22 increased to Rs 4,521 crore, from Rs 3,843 crore in same quarter last fiscal, up 18 per cent.
According to HDFC Securities, Kotak Mahindra Bank’s (KMB) Q4FY22 earnings were significantly ahead of estimates on account of reversal in COVID provisions, robust loan growth (21 per cent YoY), and reflation in NIM (4.8 per cent).
KMB sustains the growth momentum for the third straight quarter, with loan growth at 21 per cent YoY, largely driven by sustained acceleration across home loans (39 per cent YoY) and a significant ramp-up in unsecured retail credit.
However, the increasing interest rate cycle, along with strong loan growth, is likely to drive the cost of funds higher, along with higher opex intensity leading to dilution of some of the superior metrics.
We tweak our FY23/FY24 estimates by 4 per cent or3 per cent to factor in higher loan growth and margin compression and maintain ADD with revised SOTP-based TP of INR2,217 (standalone at 3.7x Mar-24 ABVPS).
Prabhudas Lilladher said that KMB’s Q4 earnings were higher led by healthy loan growth of 21 per cent YoY, solid fee income accretion, and provision write back. Margins were a tad better led by higher CASA share.
On rate hike and inflation, the company suggested that while the situation is evolving, as of now it seems credit growth may not be materially impacted although a higher secured pool can offer a good inflation hedge.
Also, it indicated that in short term there could be a positive impact on NIM for banks having a higher share of short-term assets, it said.
However, it noted that the margin impact in the medium-term would be tough to ascertain as it will depend on various factors. For KMB 48 per cent of the loans are linked to EBLR (in-line with peers) which may safeguard NIM while the lower unsecured pool may protect asset quality.
"We like Kotak Bank owing to solid credit practices and balance sheet management, although valuations are steep to upgrade the stock. We retain ‘ACCUMULATE’ with SOTP based target price of Rs 1,925," the brokerage firm added.
Motilal Oswal also said that KMB delivered a healthy core operating performance and broad-based loan growth. NIM inched up further sequentially and is at the higher end of the range in recent years.
It added that the asset quality stays robust, with a further dip in GNPA/NNPA and an improvement in PCR, while the restructured book remains under control ~0.44 per cent of loans. KMB carries additional COVID-related provisions of Rs 5.5 billion (0.2 per cent of loans).
"We fine-tune our earnings and estimate the bank to deliver 15 per cent earnings CAGR over FY22-24. We maintain our Neutral rating with a target price of Rs 2,000 per share (3.1x FY24E ABV + INR587 for its subsidiaries)," the brokerage house said in its recent report.
At 14:15 hours, the shares were trading 1.37 per cent higher at Rs 1,800 on BSE. Market cap of the bank rose to Rs 3,57,497.12 crore.
Shares of Kotak Mahindra Bank (KMB) were trading higher after the bank reported better than expected earnings for the quarter ended March 2022.
Kotak Mahindra Bank reported a 64.5 per cent year-on-year (YoY) jump in standalone net profit at Rs 2,767 crore for the quarter ended 31 March. 2022. The private lender had reported a net profit of Rs 1,682 crore in the year-ago period.
The lender's net interest income (NII) for Q4FY22 increased to Rs 4,521 crore, from Rs 3,843 crore in same quarter last fiscal, up 18 per cent.
According to HDFC Securities, Kotak Mahindra Bank’s (KMB) Q4FY22 earnings were significantly ahead of estimates on account of reversal in COVID provisions, robust loan growth (21 per cent YoY), and reflation in NIM (4.8 per cent).
KMB sustains the growth momentum for the third straight quarter, with loan growth at 21 per cent YoY, largely driven by sustained acceleration across home loans (39 per cent YoY) and a significant ramp-up in unsecured retail credit.
However, the increasing interest rate cycle, along with strong loan growth, is likely to drive the cost of funds higher, along with higher opex intensity leading to dilution of some of the superior metrics.
We tweak our FY23/FY24 estimates by 4 per cent or3 per cent to factor in higher loan growth and margin compression and maintain ADD with revised SOTP-based TP of INR2,217 (standalone at 3.7x Mar-24 ABVPS).
Prabhudas Lilladher said that KMB’s Q4 earnings were higher led by healthy loan growth of 21 per cent YoY, solid fee income accretion, and provision write back. Margins were a tad better led by higher CASA share.
On rate hike and inflation, the company suggested that while the situation is evolving, as of now it seems credit growth may not be materially impacted although a higher secured pool can offer a good inflation hedge.
Also, it indicated that in short term there could be a positive impact on NIM for banks having a higher share of short-term assets, it said.
However, it noted that the margin impact in the medium-term would be tough to ascertain as it will depend on various factors. For KMB 48 per cent of the loans are linked to EBLR (in-line with peers) which may safeguard NIM while the lower unsecured pool may protect asset quality.
"We like Kotak Bank owing to solid credit practices and balance sheet management, although valuations are steep to upgrade the stock. We retain ‘ACCUMULATE’ with SOTP based target price of Rs 1,925," the brokerage firm added.
Motilal Oswal also said that KMB delivered a healthy core operating performance and broad-based loan growth. NIM inched up further sequentially and is at the higher end of the range in recent years.
It added that the asset quality stays robust, with a further dip in GNPA/NNPA and an improvement in PCR, while the restructured book remains under control ~0.44 per cent of loans. KMB carries additional COVID-related provisions of Rs 5.5 billion (0.2 per cent of loans).
"We fine-tune our earnings and estimate the bank to deliver 15 per cent earnings CAGR over FY22-24. We maintain our Neutral rating with a target price of Rs 2,000 per share (3.1x FY24E ABV + INR587 for its subsidiaries)," the brokerage house said in its recent report.
At 14:15 hours, the shares were trading 1.37 per cent higher at Rs 1,800 on BSE. Market cap of the bank rose to Rs 3,57,497.12 crore.