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Kotak Mahindra Bank share falls 2% ahead of Q2 earnings, here's what brokerages expect

Share of Kotak Mahindra Bank fell over 1.93% to Rs 1356 against previous close of Rs 1383 in early trade

twitter-logoBusinessToday.In | October 26, 2020 | Updated 13:13 IST
Kotak Mahindra Bank share falls 2% ahead of Q2 earnings, here's what brokerages expect
Kotak Mahindra Bank trades higher than 20 day, 50 day and 100 day moving averages but lower than 5 day and 200 day moving averages

Kotak Mahindra Bank share was trading lower ahead of the private sector lender's Q2 earnings set to be announced later in the day. Share of Kotak Mahindra Bank fell over 1.93% to Rs 1356 against previous close of Rs 1383 in early trade.

Total 0.59 lakh shares changed hands amounting to turnover of Rs 8.12 crore on BSE.

Market cap of the firm rose to Rs 2.69 lakh crore. The stock trades higher than 20 day, 50 day and 100 day moving averages but lower than 5 day and 200 day moving averages. The share has lost 14.29% in one year and fallen 19.2% since the beginning of this year. However, in a month, the share has gained 9%.

Brokerages predict lender's profit is likely to fall due to higher provisioning.

IndusInd Bank refutes reports of merger with Kotak Mahindra Bank

"We expect net interest margin to dip, on account of asset side re-pricing and a lower cost-to-deposit ratio. NIMs will be partially cushioned by the recent drop in saving account rates and the recent fundraise. We expect NII growth of 12.6 percent YoY (up 1 percent QoQ)," said HDFC Securities.

"With controlled operating expenses growth PPoP is expected to grow at 10.5 percent YoY and 5.6 percent QoQ. We have factored in higher provisions (up 2.3x YoY and flat QoQ). Consequently, PAT is expected to de-grow 20.7 percent YoY but up 10 percent QoQ," the brokerage added.

Edelweiss says Kotak Bank may report a 39.9 per cent fall in profit after tax, and sees pre-provision operating profit (PPoP) dropping by 15.6 per cent.

"Growth momentum is likely to be soft and below trend (risk conscious stance will sustain, as was seen in prior quarters). Asset quality should be broadly stable while provisioning might increase to build in adequate buffers for current uncertainty," the brokerage said in a note.

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