22 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.
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.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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