Prabhudas Lilladher recommended Hold rating on Kotak Mahindra Bank with a target price of Rs 1291 in its research report dated October 24, 2018.
Prabhudas Lilladher's research report on Kotak Mahindra Bank
KMB's s'lone earnings was largely in-line with expectations with PAT at Rs11.4bn (PLe: Rs11.8bn) but operating pressure felt some pressure as NII growth was slower and higher other opex offset better other income. Loan growth continued to be across segments except business banking, while deposit traction especially CASA was good. On Subs, capital market businesses were soft, while financial services businesses were seen with steady trends.
Outlook
Post our downgrade in Jul'18 to "Hold" stock has seen correction of 12% and currently trades at 3.3-3.4x core book which is still premium/at par peers and promoter stake stance still remains unclear and hence we retain HOLD rating with revised TP of Rs1,291 based 3.2x Sep-20 lending book and SOTP for subs. Better liability profile, good loan growth and steady asset quality remain key catalyst for higher valuations.
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