What should investors do with Kotak Mahindra Bank after Q1 results: buy, sell or hold?
Net interest income (NII) for Q1FY22 increased 6 percent YoY to Rs 3,942 crore, from Rs 3,724 crore in Q1FY21. Net interest margin (NIM) for the said quarter stood at 4.60 percent.
#KOTAKBANK KBANK share price traded marginally in the green on July 27, a day after the company declared its June quarter results.
The bank on July 26 reported a 32 percent year-on-year (YoY) jump in standalone Q1FY22 net profit at Rs 1,641.92 crore against Rs 1,244.45 crore in Q1FY21.
Net interest income (NII) for Q1FY22 increased 6 percent YoY to Rs 3,942 crore from Rs 3,724 crore in Q1FY21. Net interest margin (NIM) for the said quarter stood at 4.60 percent. Operating profit for the quarter came in at Rs 3,121 crore, up 19 percent YoY against Rs 2,624 crore in Q1FY21.
CASA ratio as of June 30, 2021, stood at 60.2 percent compared to 56.7 percent as of June 30, 2020.
Gross NPA at the end of the quarter stood at 3.56 percent and net NPA was 1.28 percent.
The capital adequacy ratio of the bank as per Basel III as of June 30, 2021, was 23.1 percent and the Tier I ratio was 22.2 percent.
The stock was trading at Rs 1,743.40, up Rs 3.00, or 0.17 percent at 09:27 hours. It has touched an intraday high of Rs 1,750.95 and an intraday low of Rs 1,741.65.
Here is what brokerages have to say about the stock and the company after Q1 earnings:
Citi | Rating: Neutral | Target: Rs 1,930
The bank posted strong NIM, slow Growth while slippages declined QoQ. Low cost of funds should support NIM. Slower credit growth could drag NII and PPoP. The brokerage firm has lowered FY22 net profit estimates by 3% to incorporate higher opex.
CLSA | Rating: Outperform | Target: Rs 1,900
Q1 headline PPoP/Profit was in-line with weak growth netted off by better NIM. While slippages spiked, recoveries have picked up meaningfully from June, it said.
Morgan Stanley | Rating: Equal-weight | Target: Rs 1,900
Profit was better than expected; core PPoP was up just 3% YoY and 3% below estimates. Margin expanded, but average IEA/Loan growth was slower.
Motilal Oswal | Rating: Neutral | Target: Rs 1,900
Kotak Mahindra Bank reported in line operating performance, though lower provisions against our estimate led to standalone PAT growth of 32% YoY (5% beat). Consolidated PAT declined by 3% YoY on account of weaker performance from subsidiaries, mainly Kotak Life and Kotak Prime.
Loan book fell ~3% QoQ (up 6.6% YoY) led by a decline across most segments. On the liability front, CASA growth remains steady, driving CASA mix to 60.2% (highest in the industry).
The bank reported an in line core operating performance in a challenging environment, despite muted loan growth across most segments. The bank continues to report steady progress in building a strong liability franchise, with a CASA ratio of ~60% (highest in the industry). Asset quality was affected due to the second COVID wave, which hampered collections, thus driving elevated slippages.
We estimate a credit cost of 1.1% for FY22E (v/s 1.3% in FY21). We maintain our earnings estimate for FY22E/FY23E. We maintain our Neutral stance with a target to Rs 1,900 per share.
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