Kotak Mahindra Bank’s share price gained up to 1% in morning trades on the BSE on Monday after Q3 Results over the weekend. Although net profit missed some analysts’ estimates, the same was due to one-time items.
Kotak Mahindra Bank (KMB) reported standalone net profit growth of 7.6% YoY to ₹3005. This was slightly lower than analyst expectations as Q3FY24 results for Bank include ₹143 crore provision (post-tax) on applicable Alternative Investment Fund (AIF) investments as per the RBI circular dated 19th December 2023. Consolidated net profit stood at 4,265 (7% YoY growth).
Net Interest Income grew 16% year-on-year to ₹6554 Crores up 15.9% year on year was up 4.1% sequentially. Net interest margins, which fell in Q2FY23, however now stood steady at 5.22% sequentially.\
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Some analysts, however, cut their previous estimates, but generally analysts maintained their positive attitude.
Analysts at Motilal Oswal Financial Services have cut our FY24 and FY25 net profit estimates by 3.2% and 2.7% and estimate that Kotak Mahindra Bank will deliver Return on Assets and Return on Equity of 2.4% and 14.4% by FY25. According to MOFSL Kotak Mahindra Bank delivered a mixed quarter with a miss in earnings due to high provisions, however, NIMs remained stable at 5.2% sequentially. Asset quality remained stable with slippages decreasing sequentially. Kotak Mahindra has additional Covid-related provisions.
The Kotak Mahindra Bank continues to lead for a constant growth trend and aims to improve the mix of unsecured loans to mid-teens, expressing confidence in the quality of the underlying portfolio, analysts emphasized.
However those at Antique Stock Broking have marginally increased their estimates by 1%–3% over FY24–26 leading to a revised target price of ₹1,276 (2.6 times FY26 core Book Value and ₹178 for subsidiaries) According to Antique Stock Broking , the Net Non-Performing Loans NNPLs were stable sequentially at 0.4%, restructured loans remain low at 0.3%, along with counter-cyclical buffers standing at 1.4% of total loans.
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Loan growth remains strong (4% sequentially and 19% year-on-year), with fairly good all-round growth. Deposit mobilization was healthy at 3% sequentially (19% YoY) led by a 5% sequential increase in term deposits while CASA growth was flat sequentially.
Analysts at Emkay Financial Services said they expect Kotak Mahindra Bank’s RoA and RoE to normalize to 2.1% and 13% respectively from the highs of 2.4% and 14.5% in FY23 due to margins / LLP normalization. They have maintained ADD ratings with a target price of Rs1,950 per share, which implies 2.5 times Dec25 valuation core bank ABV and a subsidiary value at Rs480/share.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions
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Published: 23 Jan 2024, 10:13 IST