Hold Kotak Mahindra Bank, target price Rs 2000: Emkay Research

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Emkay Research has a hold call on with a target price of Rs 2000 for a period of 12 months. The present market price of Kotak Mahindra Bank is Rs 1751.6.

Kotak Mahindra Bank Ltd, integrated within the yr 1985, is a banking firm with a market cap of Rs 344244.86 Crore.

Kotak Mahindra Bank’s key Products/Revenue Segments embody Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the yr ending 31-Mar-2020.

Investment Rationale

Research expects the financial institution to ship a superior RoA round ~2 per cent, whereas RoE to enhance step by step to 12-14 per cent over FY22-24E on the again of a gradual improve in leverage, with the financial institution displaying an intent to develop. The RBI’s latest time period restriction of 12 years for promoter/main shareholder cum administrators/MD & CEO is not going to have an effect on the continuing time period until Dec’23.

Emkay Research retains maintain name with a target price to Rs 2,000, based mostly on 4x core P/ABV FY23E (vs. earlier 4.1x) and subs valuation of Rs 498 (vs. earlier Rs 452). Key dangers to Emkay’s name embody, higher-than anticipated NPA formation primarily in retail/SME e-book, failure to ship on development and administration attrition.

Financials

For the quarter ended 31-03-2021, the corporate has reported a Consolidated Total Income of Rs 16175.87 Crore, up 9.04 per cent from final quarter’s Total Income of Rs 14834.99 Crore and up 33.85 per cent from final yr identical quarter’s Total Income of Rs 12084.71 Crore. The financial institution has reported web revenue after tax of Rs 2589.32 Crore within the newest quarter.

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