ICICI Direct recommended hold rating on Kotak Mahindra Bank with a target price of Rs 1500 in its research report dated July 23, 2019.
ICICI Direct's research report on Kotak Mahindra Bank
Kotak Mahindra Bank reported a healthy set of numbers. The operational performance continue to remain healthy at Rs 2399 crore, up 18% YoY on the back of healthy net interest income (NII) growth & strong core fee income. NII was at Rs 3173 crore, up 22.8% YoY, led by an improvement in margins of 19 bps YoY at 4.49%. Other income grew ~12% YoY to Rs 1305 crore led by treasury gains. Core fee income growth remained steady at 9.4% YoY. Stable provisions on advances at ~Rs 273 crore and controlled operational expense of ~Rs 2079 crore led to robust earnings growth of 32.7% YoY at ~Rs 1360 crore. Overall asset quality remained stable with GNPA ratio at 2.19% & NNPA ratio at 0.73%.
Outlook
However, uncertainty regarding outcome of tussle between bank and RBI is seen to act as a material overhang. Therefore, we maintain our HOLD rating with target at Rs 1500, based on SOTP valuation.
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