17 KOTAKBANK share price target reports by brokerages below. See what is analyst's view on KOTAKBANK share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Kotak Mahindra Bank is one of the leading banking and financial groups in India. Currently, the bank has 1,539 full-fledged branches and 2,447 ATMs. About 9.65% of the total loan book is under moratorium 2.0. Bank expects to get back to a run rate of 2019-20 in about a year’s time (by Q1FY22). Collection efficiency during June is close to pre-COVID levels. We retain our BUY rating on the stock and value the bank at 3.5x FY22E BVPS with a revised target price of Rs. 1,572.
KMB’s s’lone earnings of Rs12.4bn (PLe: Rs15.7 bn) was a miss on back of slightly higher provisions and lower other income (as bank did not book any treasury gains). NII growth of 18% YoY stood out despite loan growth being flattish YoY as bank has been materially benefitting from lowering cost of funding (150bps SA rate cut in 3 months). Moratorium has come off to 9.65% v/s 26% in May with certain collections to be made from Morat 1.0, but could add to stress eventually from H2FY21 onwards. We continue to build 80- 100bps of credit cost and 150bps of slippages in FY21/FY22E respectively. In our view, the bank has a very resilient balance sheet to any shock with strong capital ratios, improved liability franchise over last 2 years and ability to manage asset quality. We retain ACCUMULATE with TP of Rs1,389 (from Rs1,343) based on 3.1x core Mar-22 BV & Rs275 for subs.
Loan growth remains muted as KMB continues to be cautious in a weak macro environment, further aggravated by the COVID-19 crisis. On the other hand, deposit growth remains strong, with the CASA ratio scaling new heights. On the asset quality front, 26% of the portfolio availed moratorium. Moreover, the standstill benefit enabled 90dpd loans worth INR6.6b to continue as standard. Overall, operating performance stood healthy, with PPOP growing at 19% YoY, although provisions for COVID-19 affected earnings. We cut our PAT estimate for FY21/22 by 14%/8%, primarily as we factor in higher credit cost. Maintain Neutral.
KMB has been one of the most consistent performers over the years, which was driven by best in class return ratios & margin profile. Given the government support, MSME advances would occupy significant space for incremental lending in the near term. Its long term focus continues on maintaining risk adjusted returns but given economic headwinds, we lower our growth estimate. We estimate RoA, RoE at 1.6%, 11.7%, respectively, for FY22E. Management strength and sustainability enable BUY rating with target price of Rs 1600, valuing the bank at 3.8x FY22E.
As per the bank, total provisions, including those on standard assets, covid-related and NPA coverage cover the current stock of stress more than adequately. Unsecured consumer credit, credit cards and CVs are some of the segments which are likely to see high stress levels. The bank’s cautious stance on these segments is well reflected in the segment-wise growth rates which indicate that PL/BL/consumer durables book was down 1% QoQ while credit cards book was down 4% QoQ. The bank is in the process of raising Rs75- 80bn worth of equity capital, which should further strengthen the balance sheet. We expect capital ratios to improve by ~90bps. Per se, on the key P&L Items, KMB posted NII growth of 17% YoY at Rs35,597mn, PPOP growth of 19% YoY at Rs27,253mn and PAT decline of 10% YoY at Rs12,666mn. NII/PPOP/PAT were 2%/3%/21% below estimates. We have revised our estimates for FY21/FY22 and retained Buy rating on KMB with a revised target price of Rs1,463 (from Rs1,658 earlier), valuing the standalone bank at 3.2xFY22E P/BV and ascribing a value of Rs360 to the subsidiaries. Our lowering of standalone BV multiple reflects the subdued ROE profile and asset quality challenges in the near term.
KMB’s s’lone earnings of Rs12.6bn (PLe: Rs13.2 bn) stood lower on back of higher provisions both on overdue loans opting moratorium and enhancing PCR towards 70%, where other large peer banks are standing at. Loan growth remained challenging at 6-7% with conservative lending amongst segments, although deposit franchise continued to show a traction with strong SA inflow. Bank has used this opportunity to cut SA rates and benefit itself from lower deposits costs with further cuts in Apr’20 to bridge the gap on cost of funds with peers, thus helping NIMs move higher to 4.72%. Management sounded cautious on business ahead and remained selective on the growth front. Also it feels, risks from COVID disruption are high leading to rise in credit cost & slippages and we try to resonate our estimate 85bps credit cost + 30bps of COVID provisioning in FY21. We retain ACCUMULATE with TP of Rs1,343 (from Rs1,405) based on 3.0x core Mar-22 BV & Rs281 for subs.
Slowdown in growth is a resultant of stuttering macro environment and we expect the economy to improve gradually. Growth in 811 digital banking product is expected to reap benefits in the coming years. Resultantly, we cautiously value the bank at 3.6x FY22E BVPS, with a target price of Rs. 1,730 and maintain our HOLD recommendation.
Despite some disappointment on growth front, we continue to like KMB for its strong liability franchise (CoF amongst the lowest in industry), conservative lending approach, and strong capital position. However, trading at 4.9 times Dec-21E P/ABV, any upside in valuations may be capped given interim growth challenges and lack of clarity over promoter’s stake. Our earnings estimates are revised lower by 7%/9% for FY20E/21E led by lower growth and slightly higher slippages. We introduce FY22 estimates and roll forward our valuations to Dec-21E, maintaining our HOLD rating with a Target Price of Rs1,750 (from Rs1,720 earlier) based on 3.7x Dec-21E adjusted PBV (standalone bank) and the value of its subsidiaries, implying a Dec-21E P/ABV of 5.5x.
We have revised our NII estimates by -1.0%/-3.8%/-4.8%, PPOP estimates by -2.4%/-7.5%/-9.2% and PAT estimates by -1.2%/-7.8%/-9.3% for FY20/FY21/FY22, respectively. We have retained Accumulate rating on KMB with a revised target price of Rs1,757 (from Rs1,781 earlier), valuing the standalone bank at 4.0x H1FY22E P/BV and ascribing a value of Rs 429 to the subsidiaries.
KMB’s earnings were slightly below estimates as opex (led by a one-off) and provisions came in higher. GNPAs continued to rise, though not alarmingly. Maintain NEUTRAL with a TP of Rs 1,681 (4.25x Dec-21E core ABV of Rs 309 + Rs 367 for subs), as valuations are expensive.KMB’s strong fundamentals (CRAR, liability franchise, minimal reported stress) should enable the bank to deliver an improvement in already strong return ratios. We do not find the current slowdown in growth and uptick in stress worrisome. Our NEUTRAL stance reflects discomfort on rich valuations. The contentious issue of promoter holding remains unresolved, and the next hearing is slated in Mar-20.
KMB has been one of the most consistent performers over the years, driven by best in class return ratios & margin profile. A cautious approach within corporate, SME & unsecured retail is seen impacting growth. However, bank credit growth is seen remaining healthy compared to the industry. Performance of subsidiaries (life insurance and AMC) remains strong on growth & profitability, value enrichment remains positive. The bank’s longterm focus continues on maintaining risk adjusted returns. However, given economic headwinds, we lower our growth estimate. We maintain HOLD rating with an unchanged target price of Rs 1700, based on SOTP valuation.
KMB’s strong foundation—liability franchise, capital, limited stress—to build a scalable model will yield results as competition from NBFCs/PSU banks wanes. Non-banking subsidiaries are also seeing improvement in earnings momentum. Maintain ‘BUY/SP’.
KMB has maintained a consistent performance in terms of RoA at 1.7%, RoE of 12-14%. Going ahead, focus on pedalling b/s growth, maintaining risk adjusted returns will benefit return ratios. The bank is seen as one of the major beneficiaries of lower tax regime. Performance of subsidiaries (prime, life insurance, AMC business) remains strong on growth & profitability. Value enrichment remains positive with contribution at 28%. Hence, we maintain HOLD with a revised TP of Rs 1700, based on SOTP valuation. Outcome of tussle between bank and RBI continues to remain key monitorable.
We have revised our NII estimates by -0.8%/-2.1%/-3.1%, PPOP estimates by - 0.8%/-2.2%/-3.1% and PAT estimates by -2.2%/-3.1%/-3.0% for FY20/FY21/FY22, respectively. We have retained Buy rating on KMB and revised our target price to Rs1,905 (from Rs1,830 earlier), valuing the stock at 4.2x H1FY22E P/BV.
Outlook & Valuation: KMB has strengthened its liability profile with increased share of granular retail loans and sharp rise in CASA over the years. Moreover, its conservative lending and healthy performance across the asset quality cycles make it a preferred play amidst a not-so-benign operating environment. We expect improving liability profile and improved pricing power to aid the bank’s margin and profitability going forward. Keeping our estimates unchanged for forward years, we maintain our BUY recommendation on the stock with a SOTP-based revised Target Price of Rs1,600 (from Rs1,550 earlier) based on 4.2x FY21E adjusted PBV (4x earlier) and the value of its subsidiaries, implying a FY21 P/ABV of 5.7x.
We apply a P/B multiple of 4.8x to the FY20 book value of the parent bank and arrive at a TP of INR 1,620 per share on SoTP basis, an upside of 8.4% over CMP. Since, our last “BUY” rating, the shares of Kotak Bank has advanced 6.4%. We remain positive on the counter and recommend an “Accumulate” rating.
Kotak Mahindra Bank (KMB) delivered a steady Q1FY20, reinforcing our view that its earnings momentum would sustain in spite of the challenging environment. Key highlights: a) Growth momentum softened due to lower growth in corporate/business banking (cautious stance) and below-trend vehicle finance growth (slow underlying sales). b) That said, an improving NIM profile (returns consciousness) supported 20%-plus YoY NII growth. c) The continued focus on building up the stable and low-cost franchise is evident from CASA growth of 20%-plus YoY (contrary to softening trend at peers) and suggests it is priming for growth. Given KMB’s: a) best-in-class liability franchise (CASA ratio of >50%); b) marginal stress baggage—GNPL at 2.19%; and c) strong capitalisation (tier-1: >17%), a strong foundation is in place to capture emerging opportunities. Key variables: the roadmap for reduction in promoter shareholding. Maintain ‘BUY’ with a revised SoTP of INR1,632 (rolling forward by one quarter; earlier INR1,576).
We have revised our NII estimates by -1.6%/-4.2%, PPOP estimates by 0.8%/-2.2% and PAT estimates by 1.3%/-1.8% for FY20/FY21, respectively. We have retained Buy rating on KMB and revised our target price to Rs1,676 (from Rs1,751 earlier), valuing the stock at 4.1x FY21E P/BV.
Despite a challenging environment on the liabilities front, KMB has managed to improve its CASA share with most of the growth coming from the granular sources. Given its conservative lending and healthy performance across the asset quality cycle, KMB will continue to be one of the preferred plays amidst a not-so-benign operating environment for banks. Clarity on dilution in promoters’ holding is awaited, which could be a near-term overhang for the stock. At CMP, the stock trades at 4.9x FY21E. We maintain our BUY recommendation on the stock with an SOTP-based revised Target Price of Rs1,550 (from Rs1,500 earlier) based on 4x FY21E adjusted PBV and the value of its subsidiaries, implying a FY21 P/ABV of 5.5x.
Consistent performance across parameters justifies our positive view on KMB. The minor slip in asset quality is excusable. Maintain BUY with an SOTP of Rs 1,481 (4.25x Mar-21E core ABV of Rs 272 + Rs 326 for subs).
The Government’s increased focus on rural and affordable housing and infrastructure development, coupled with government initiatives like increase in MSP for kharif crops as well as rising concretization of houses in rural India, gives us reason to believe that the increased volumes should sustain. Although increase in fuel prices and input material costs are expected to continue, we believe that the increase in demand (owing to PMAY, metro, roads and ports projects) coupled with efficient cost management by the company will offset the cost pressure and maintain profitability. We remain positive on the stock with a arget price of INR 239 giving an upside of 9.8%. (i.e. valuing the stock at CY20E EV/Ton of $150/Ton, 11x CY20E EV/EBITDA) and ACC’s stake valued at INR 66/share
The NBFC reported a strong quarter, with a NII growth of 21% YoY, lower credit costs and improved asset quality. Its opex increased due to investments in 121 new branches. This is expected to improve traction in asset growth next year. We have factored an asset growth of CAGR 18% (reduced our asset growth estimates marginally by 200 bps against vehicles), driven by 15% and 18% in vehicles and LAP, respectively. The PAT is likely to grow at a CAGR 25% over FY19-21E and the ROA is expected to improve 10 bps to 2.3% by FY21E. The concerns about a slowing CV cycle is expected to be partly mitigated by market share gains in vehicles and traction in home equity. Maintain Accumulate at 3x FY21 E P/ABV (Target of Rs 1550).
KMB has maintained consistent performance in terms of RoA at 1.7% and RoE of 12-14%. Going ahead, focus on pedalling balance sheet growth, maintaining risk adjusted returns will benefit return ratios. Performance of non-banking businesses (prime, life insurance and AMC business) remains strong on growth & profitability while their contribution was at 30%. We maintain our HOLD rating with revised SoTP target of Rs 1500 (earlier Rs 1400) led by insurance (EV Rs 7300 crore) and AMC upgrade. Hearing of case between bank and RBI postponed to January 2020 still remains an overhang.
Kotak enjoys strong growth visibility and superior asset quality management. It has witnessed significant traction in CASA and expect strong traction in earnings to continue owing to robust growth in loan book, moderate credit cost and healthy margins. At the CMP of Rs. 1237.90, the stock trades at ~28 times FY20 EPS of Rs. 45. Hence, we recommend a BUY on the stock with a Target Price of Rs. 1,440 with an upside potential of ~16% from the current level with an investment horizon of 9-12 months.
KOTAKBANK has been consistently growing its loan book above 20% along with its stable asset quality. At CMP, the stock is trading at 3.78x FY20E P/BV and we would like to allot a multiple of 4.2x P/BV on account of its sustainable growth rate. We feel it is trading at sustainable valuation at CMP, hence we maintain BUY on the stock with target price of Rs.1436
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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