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Business News/ Markets / Stock Markets/  Kotak Mahindra Bank share price drops over 2% post Q2 Results; here's what brokerages say

Kotak Mahindra Bank share price drops over 2% post Q2 Results; here's what brokerages say

Kotak Mahindra Bank share price falls after Q2 results. Kotak Mahindra Bank reports 24% increase in net profit for Q2. Kotak Mahindra Bank receives approval for new MD and CEO.

Kotak Mahindra Bank share price opened at intraday high of ₹1,772 apiece on BSE.Premium
Kotak Mahindra Bank share price opened at intraday high of 1,772 apiece on BSE.

Kotak Mahindra Bank share price fell over 2% on Monday's trading session following the private lender's Q2 results. For the quarter that ended on September 30, Kotak Mahindra Bank reported a 24% increase in its standalone net profit to 3,191 crore. This increase was mostly due to an improvement in core income and a decrease in bad loans. Kotak Mahindra Bank share price opened at intraday high of 1,772 apiece on BSE.

In the same quarter of the previous fiscal year, the private sector lender reported a net profit of 2,581 crore. According to a regulatory statement by Kotak Mahindra Bank, its total income for the July–September period increased to 13,507 crore from 9,925 crore in the corresponding quarter last year.

Net interest income (NII) rose from 5,099 crore to 6,297 crore in a year, a 23% rise. Compared to the same period in the prior fiscal year, when it was 5.17%, its net interest margin increased to 5.22% for the quarter.

At 09:59 IST, Kotak Mahindra Bank share price was trading at 1,734.30 apiece on BSE, down 1.99%. 

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Also Read: Kotak Mahindra Bank Q2 Results: Net profit rises 24% to 3,191 crore, NII up 23% YoY

As per the exchange filing, Kotak Mahindra Bank received approval from Reserve Bank of India (RBI) to nominate Ashok Vaswani as its new MD and CEO. The appointment will be in effect by January 1, 2024.

According to technical analysts, The Kotak Mahindra Bank share price have slipped lower in the initial hours post the key announcement of CEO and Quaterly results. 

“This stock has been an under performer but is now forming a base around a long term support around 1700 levels. If these levels are breached then expect further weakness in the near term however since its forming a base if prices above higher range of consolidation around 1780, then expect a strong move on upside, 1700 - 1780 key levels to watch," said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.

Here's what brokerage say about Q2 results of Kotak Mahindra Bank;

Nuvama Institutional Equities

The brokerage in its report stated that Q2FY24 NII was posted in-line by Kotak. Although deposit growth was only 4% QoQ, loan growth was robust at 6% QoQ and 21% YoY. The entire savings deposit held steady quarter over quarter, indicating poor savings performance. Comparing NIM against the brokerages' projection of 17 basis points, NIM declined 35 basis points QoQ to 5.2%. In line NII, however, was the result of higher other interest. Unsecured loans increased from 10.7% to 11% on a quarterly basis. There was only one instance of the NIM decline.

“We retain ‘HOLD’ on Kotak Mahindra Bank. While soft savings and NIM are likely priced in, a new external CEO and a likely acquisition would serve as overhangs. All in all, we are tweaking earnings and cutting the target price to 1,900 based on 2.6x BV FY25E," the brokerage said.

Motilal Oswal Financial Services

Kotak Mahindra Bank posted a mixed quarter, according to the brokerage's report, with a 4% beat in PAT and a 35bp QoQ decline in NIM. Due to increased fee income and trading gains of 1.5 billion, standalone PAT increased 24% YoY to 32 billion. Consolidated PAT was 44.6 billion, up 24% YoY.

With stronger-than-expected loan growth (19% YoY) and NIMs moderating 35 basis points QoQ, NII climbed 23% YoY to 63 billion (in line with brokerage estimates).

The CASA mix moderated 70 basis points QoQ due to a shift in SA deposits towards the recently launched ActivMoney product, but deposit growth remained constant. Gross slippages rose 9% QoQ to 13 billion; nevertheless, robust recoveries and upgrades allowed GNPA/NNPA ratios to improve by 5 basis points, or 3 basis points, to 1.72%/0.37%.

"The RBI has approved the appointment of Mr. Ashok Vaswani as the next MD & CEO of the bank for three years. Vaswani has over three-and-ahalf decades of experience working at multinational banks, initially at Citigroup and more recently at Barclays in executive positions. We believe that execution under the new CEO will remain a key monitorable to assess the stock’s performance over the near term.

We increase our FY24/FY25 PAT estimates by 5%/7%, reflecting strong other income and controlled opex. Maintain Neutral with a target price of 1,900," the brokerage said.

Antique Stock Broking Ltd 

“Kotak Mahindra Bank's performance continues to be healthy with a RoA of 2.4%. Even as NIM moderates and credit cost normalizes around 50 bps, we expect RoA of 2.4%/ 2.1% and core RoE of 14%–15% over FY24/ 26E. While we do not foresee a very near-term challenge, the key test for the bank would be sustaining performance in a weaker consumer credit cycle given the late push in unsecured retail assets (unseasoned) and diminishing strength on the liability side. Maintain BUY with SoTP-based target price of 2,250," the brokerage said. 

Also Read: Kotak Mahindra Bank Q2 Results Preview: Net profit seen over 10%, NIIs to rise 20% on strong loan growth

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 23 Oct 2023, 09:59 AM IST
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