Prabhudas Lilladher recommended hold rating on Kotak Mahindra Bank with a target price of Rs 1385 in its research report dated May 01, 2019.
Prabhudas Lilladher's research report on Kotak Mahindra Bank
KMB's s'lone earnings of Rs14.1bn (PLe: 14.0bn) were in-line with misses on slightly slower top line but held up on lower provisions on largely stable asset quality. Key discussions in industry has been on liabilities garnering and KMB has showcased continued robustness in CASA growth of 21% (both on EOP & Average basis) versus sluggishness for the industry. On the non-bank business, Insurance has outstood the industry with VNB margins of 37% from ~29% in FY18, APE growth of 21% YoY and EV growth of 25% YoY, while other subs related to capital market continued to be slightly subdued. Bank's performance has been leading improvement in return ratios efficiency and deserves better than peers multiple but constraint has been on other parts of lending business which has been slower especially Kotak Prime (Auto loans).
Outlook
Hence, we retain our HOLD rating with revised TP of Rs1,385 (from Rs1,291) based on 3.2x lending BV and SOTP of Rs441 as we roll over to Mar-21.
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