Kotak Mahindra Bank: What should investors do with stock post March results? Here is what brokerages recommend

Kotak Mahindra Bank on Wednesday reported a 65 per cent surge in in standalone net profit at Rs 2,767.40 crore in the quarter ended March 31, 2022. The private bank had reported a net profit of Rs 1,682.37 crore in the same quarter of the previous fiscal year. As per the regulatory filing by the private lender, the bank's total income on a standalone basis during the latest January-March quarter rose to Rs 8,892.26 crore as against Rs 7,953.12 crore in the year-ago period. Besides, Kotak Mahindra Bank's board also recommended a dividend of Rs 1.10 per equity share, for the year ended March 31, 2022, subject to the approval of the members at the ensuing Annual General Meeting of the bank. 

On Thursday, Kotak Mahindra Bank rose nearly two per cent to trade on day's high of Rs 1820.55 per share on the BSE.  

Post Kotak Mahindra Bank q4 results, brokerages have maintained a mixed stance on the private lender share and see an upside of 13 to 27% in the long-term. The most aggressive target of 27% on Wednesday's closing price of Rs 1776 has been put out by brokerage firm Ventura.  

Ventura on Kotak Mahindra Bank 

The brokerage house initiated a buy coverage on Kotak Mahindra Bank with a target price of Rs 2337 per equity share over a period of 18 months. It was of the view that with overhang of promoter stake sale finally put to rest, the bank is at forefront among the private sector banks to benefit from exponential growth rate of financial services industry. 

Motilal Oswal on Kotak Mahindra Bank 

Motilal Oswal maintained neutral rating and sees up to 13% upside in a period of one year on May 4 closing price. The bank continues to demonstrate steady progress in building a strong liability franchise, with CASA ratio standing ~61% (highest in the industry), it highlighted in its report. "This positions it favorably in a rising rate environment and will enable it to grow competitively in its chosen business segments. Asset quality stays robust. We maintain our Neutral rating with a TP of Rs 2,000/share,"  it added. 

Yes Securities on Kotak Mahindra Bank 

Saying discussion shifts away from loan growth to deposit accretion , the brokerage firm maintained add rating on KMB with a revised price target of Rs 2023.  

It said KMB settled for slightly lower NIM compared with ‘exceptional’ current level in search of balance sheet growth. "Various parts of the loan book continued to display a healthy growth trajectory, barring large corporate loans. Overall deposit growth was relatively muted at 2.1% QoQ with SA de-growth dragging at -1.1% QoQ. (4) We maintain ‘Add’ rating," it added.

Sharekhan by BNP Paribas on Kotak Mahindra Bank

"Kotak Mahindra Bank (KMB) reported healthy performance on all counts. Sharp improvement in NIM at 4.78% was quite encouraging and was supported by lower funding cost and higher CASA proportion, said Binod Modi, Portfolio Manager - PMS, Sharekhan by BNP Paribas. 

Additionally, sustained decline in slippages (0.27% of advances) and higher recovering & upgrade aided asset quality with GNPA improving to 2.34% (vs. 2.71% in 3QFY22), he said. Modi was of the view that advances growth of 21% YoY to Rs2.71 trillion was quite encouraging. "In our view, business momentum should continue with control on credit costs/ slippages and higher share of low cost deposits, though high opex could be a key headwind in the near to medium term perspective," he said.

Earlier on Wednesday, the lender recorded a 23.1 per cent rise in net profit at Rs 8,572.69 crore in FY 22 compared to Rs 6,964.84 crore in the same period a year ago.
The total income grew to Rs 33,393.17 crore from Rs 31,846.79 crore during the same period. On the asset quality front, the gross Non-Performing Assets (NPAs) fell to 2.34 per cent of the gross advances as of March 2022 from 3.25 per cent as on March 2021.

In value terms, the gross NPAs stood at Rs 6,469.74 crore as against Rs 7,425.51 crore. Likewise, the net NPAs too declined to 0.64 per cent (Rs 1,736.71 crore) from 1.21 per cent (Rs 2,705.17 crore).