Buy Kotak Mahindra Bank, target price Rs 2232: LKP Securities

LKP Securities has buy call on Kotak Mahindra Bank with a target price of Rs 2232. The current market price of Kotak Mahindra Bank is Rs 1918.1. Time period given by analyst is a year when Kotak Mahindra Bank price can reach defined target.

Kotak Mahindra Bank, incorporated in the year 1985, is a banking company (having a market cap of Rs 385004.60 Crore).

Kotak Mahindra Bank key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2022.

Financials
For the quarter ended 31-03-2023, the company has reported a Consolidated Total Income of Rs 20730.88 Crore, up 12.17 % from last quarter Total Income of Rs 18481.46 Crore and up 23.44 % from last year same quarter Total Income of Rs 16794.19 Crore. The bank has reported net profit after tax of Rs 4566.39 Crore in latest quarter.

Investment Rationale
The brokerage believes, 4QFY23 to be peak of earnings as there is no further room for EBLR re-pricing. TheCDR bottleneck (~89%) shows the imminent pressure to grow deposits. Furthermore, the uncertainty over Uday Kotak’s replacement will remain a short term overhang. Nevertheless, asset quality provides comfort for lower credit cost. Hence, the peak ROA (~3% in 4QFY23)likely to settle at the historical range of 2.2 % - 2.4%.

Promoter/FII Holdings
Promoters held 25.95 per cent stake in the company as of 31-Mar-2023, while FIIs owned 39.42 per cent, DIIs 21.08 per cent.