Dolat Capital Market's research report on Kotak Mahindra Bank
KMB reported a strong quarter with NII and PPoP growth of 30% and 43% YoY respectively. Reported NIM stood at 5.47%, up 30 bps QoQ, with RoA at 2.4%. Opex growth at 12% QoQ and 30% YoY was elevated. Slippages at ~1% were better than expectations. Negative net slippages and write-back of contingent provisions (Rs0.4bn) aided credit costs of 20 bps for the quarter. GNPA ratio moderated by 18 bps QoQ to 1.9%, with 400 bps sequential rise in PCR to 78%. Loans and Deposits grew by 6% QoQ each with broad based advances growth and 13% sequential growth in term deposits. Calculated CoF at 3.8% remains industry best.
Outlook
We tweak earnings factoring in slightly higher NIM, offset by rise in opex assumptions. Maintain ‘BUY’ with a revised TP of Rs2200, valuing the standalone bank at 3.5x Sep-24E ABV and including value of subsidiaries. The bank’s premium valuations are driven by its superior growth prospects, industry best NIM and credit costs.
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