Buy Kotak Mahindra Bank, target price Rs 2250: Sharekhan by BNP Paribas

Sharekhan by BNP Paribas has buy call on Kotak Mahindra Bank with a target price of Rs 2250. The current market price of Kotak Mahindra Bank is Rs 1922.75.

Kotak Mahindra Bank, incorporated in the year 1985, is a banking company (having a market cap of Rs 382928.65 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 the bank would continue to command premium valuation, given high growth potential and strong assessment capabilities in terms of underwriting. In the journey to add scale to its business, some of the matrices like cost-to-income ratios may witness near-term challenge. As most of the banks are geared to capture growth opportunities with improving credit behaviour in a tight liquidity scenario, we believe the superior liability franchisee would be an important margin driver from hereon.

The brokerage expects its subsidiaries to contribute to consolidated earnings, as they gain scale and market share gradually going forward. The stock is currently trading at 3.1x/2.7x its FY2024E/FY2025E Core BV. The near-term focus would be on the succession plans of MD and CEO.

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.