Kotak Mahindra Banks Q3 Results: Should you Buy, Sell or Hold the stock post earnings?
- Kotak Mahindra Bank: The Kotak Mahindra Banks Q3 stand alone net profit at ₹3005 growing 7.6% YoY missed estimates of some analysts. However the same was due to one offs .
Kotak Mahindra Bank share price gained up to 1% in morning trades on the BSE on Monday post Q3 Results over the weekend. Even though net profit missed estimates of some analysts, the same was due to one-offs.
Kotak Mahindra Bank (KMB) reported standalone net profit growth of 7.6% YoY to ₹3005. This was slightly lower than analyst expectations as Q3FY24 results for Bank include ₹143 crore provision (post tax) on applicable Alternate Investment Fund (AIF) investments pursuant to RBI’s circular dated 19th Dec 2023 . Consolidated net profit stood at 4,265 (7% YoY growth).
Net Interest Income grew 16% year-on-year to ₹6554 Crore up 15.9% year on year was up 4.1% sequentially. Net interest Margins that had fallen in Q2FY23 however now stood stable at 5.22% sequentially.\
Some analysts though have cut their forward estimates however generally analysts have maintained their positive stance.
Analysts at Motilal Oswal Financial Services have cut our FY24 and FY25 net profit estimates by 3.2% and 2.7% and estimate Kotak Mahindra Bank to deliver Return on Assets and Return on Equity of 2.4% and 14.4% by FY25. As per MOFSL Kotak Mahindra Bank delivered a mixed quarter with a miss in earnings due to high provisions, however, NIMs remained stable at 5.2% sequentially. Asset quality remained stable with slippages declining sequentially. Kotak Mahindra carries additional Covid-related provisions.
The Kotak Mahindra Bank continues to guide for steady growth trend and aims to improve the mix of unsecured loans to mid-teens, expressing confidence in the quality of the underlying portfolio, highlighted analysts.
Nevertheless those at Antique Stock Broking have marginally increased their estimates by 1%–3% over FY24–26 leading to a revised target price of ₹1,276 (2.6 times FY26 core Book Value and ₹178 for subsidiaries) As per Antique Stock Broking , the Net Non-Performing Loans NNPLs were stable sequentially at 0.4%, restructured loans remain low at 0.3%, along with countercyclical buffers standing at 1.4% of overall loans.
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Loan growth remains strong (4% sequentially and 19% year-on-year), with a fairly good all-round growth. Deposit mobilization was healthy at 3% sequentially (19% YoY) led by a 5% sequential increase in term deposits whereas CASA growth was flat sequentially
Analysts at Emkay Financial Services said that they expect Kotak Mahindra Bank's RoA and RoE to normalize to 2.1% and 13% respectively from the highs of 2.4% and 14.5% in FY23 due to margins/LLP normalization. They have retain ADD ratings with a target price of Rs1,950 a share, implying 2.5 times Dec25 estimated core bank ABV and subsidiary value at Rs480/share
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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