Motilal Oswal's research report on Kotak Mahindra Bank
KMB reported strong earnings in 3QFY23. Standalone PAT rose 31% YoY to INR27.9b (5% beat), driven by healthy NII and controlled provisions as PPoP grew 43% YoY. Consolidated PAT grew 17% YoY to INR40.0b. Loan growth remained strong, with margin further expanding by 30bp QoQ to 5.47%. The CASA ratio, though, moderated 290bp QoQ to 53.3%. Gross slippages moderated to INR7.5b, of which INR1.7b were upgraded in 3QFY23. Healthy recoveries and upgrades led to an 18bp/12bp QoQ decline in the GNPA/NNPA ratios. KMB reversed INR376m of Covid-related provisions; outstanding Covid-related provisions now stand at INR4.0b (13bp of loans). We maintain our Neutral rating.
Outlook
We slightly increase our earnings estimates and expect KMB to deliver a 17% earnings CAGR over FY22-25. Maintain Neutral rating with a TP of INR2,000 (3.0x Sep’24E ABV and INR555 for its subsidiaries).