ICICI Securities revises Kotak Bank's rating to Buy with TP at ₹2,040
1 min read.Updated: 28 Jan 2021, 10:29 AM IST Edited By Avneet Kaur
Kotak Mahindra Bank reported a good set of numbers on the operating front with profitability aided by healthy margins and controlled cost.
Kotak Mahindra Bank reported a good set of numbers on the operating front with profitability aided by healthy margins and controlled cost. Sequential pick-up in loan book is a positive and was in line with the management’s intent to pedal growth from here on. Analysts at ICICI Securities upgrade the bank's rating from Hold to Buy. The brokerage has set the target price at ₹2,040, 18% higher form the current market price of RS 1,784. The brokerage has revised the target price higher from an earlier TP of ₹1,950.
"Adequate provision provides comfort to deal with volatility in asset quality and, thus, earnings. The bank’s focus on improving liability franchisee makes it attractive. Consistent performance over a period of time, healthy return ratios and capable management are reasons for premium valuations," says the brokerage.
Kotak Mahindra Bank reported steady NII growth of 16.8% YoY on the back of a sequential improvement in NIM for Q3FY21. NIM improved 6 bps on a sequential basis to 4.58% owing to lower cost of funds. Other income was flattish YoY due to sluggish fee income growth of 3% YoY and lower treasury gain. C/I ratio declined ~790 bps YoY but was up ~380 bps QoQ to 42.3% as promotional, advertisement expenses increased with increasing business activity. The bank made provisions worth ₹599 crore, up 62% QoQ, including interest reversal in lieu of stressed assets. PAT, on the back of healthy operating performance, increased 16.1% YoY to ₹1853 crore.