Buy Kotak Mahindra Bank, target price Rs 1650: Motilal Oswal

Motilal Oswal has given a buy rating to Kotak Mahindra Bank with a target price of Rs 1650. The share price moved up by 11.19 per cent from its previous close of Rs 1415.75. The stock’s last traded price is Rs 1574.15.

Kotak Mahindra Bank Ltd., incorporated in the year 1985, is a banking company (having a market cap of Rs 295593.80 Crore).

Financials
The Bank reported a Gross Non Performing Assets (Gross NPAs) of Rs 6055.01 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 1636.82 Crore (.00% of total assets). For the quarter ended 30-09-2020, the company reported a Consolidated Interest Income of Rs 5473.08 Crore, down -5.20 % from last quarter Interest Income of Rs 5773.27 Crore and down -12.91 % from last year same quarter Interest Income of Rs 6284.31 Crore. The bank reported net profit after tax of Rs 2933.46 Crore in latest quarter.

Investment Rationale
The bank suggested an improving trend in asset quality and remains confident on the quantum of COVID provisions made (62bp of loans). The brokerage increases FY21/FY22 earnings by 27%/20%, led by steady revenues and sharp decline in provisioning expenses, and introduce FY23 to the estimates. It upgrades rating to Buy after a gap of 10 quarters and revises TP to INR 1,650 (3.2x Sep’22E ABV + INR493 for subs)

Promoter/FII Holdings
Promoters held 26.1 per cent stake in the company as of Sept 30, 2020, while FIIs held 42.2 per cent, DIIs 15.3 per cent and public and others 16.5 per cent.