Kotak Mahindra Bank gains 2% post Q3 results; brokerages term it a stable quarter

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Shares of Kotak Mahindra Bankgained around 2 percent intraday on Monday as investors cheered the December quarter show of the firm.

The lender reported steady set of numbers for December quarter, where the standalone net profit rose to Rs 1,053 crore against Rs 880 crore that it posted during the same quarter last year, a rise of around 20 percent.

The private sector lender’s standalone net interest income (NII) rose to Rs 2,394 crore, up 17 percent from Rs 2,050 core during the corresponding quarter last year.

Meanwhile, the standalone net interest margin (NIM) came in at 4.2 percent

On a consolidated basis, the bank’s PAT increased to Rs 1,624 crore, up around 28 percent from Rs 1,267 crore. Meanwhile, the NII came in 16 percent higher at Rs 3,186 crore against Rs 2,747 crore year on year.

Brokerage: Nomura | Rating: Neutral | Target: Rs 1,150

Nomura said that miss on margin was netted off by better-than-expected profitability of cap market related. It sees growth picking up and that the bank continued to deliver on extracting cost efficiency. The brokerage expects core RoEs to inch up to 16% by FY20. It prefers HDFC Bank given relatively reasonable valuations.

Brokerage: Macquarie | Rating: Neutral | Target: Rs 1,111

The global research firm observed that the bank had a stable quarter; subsidiaries shine as cons net profit beats estimates. Further, its arms Kotak Sec, Kotak Cap saw net profit growth of 80%/400% YoY. Additionally, standalone net profit was 20% ahead of its estimates. Macquarie likes the bank but its valuations leave limited potential for upside. Going forward, loan growth pick-up, superior subsidiary performance key catalysts for the stock.

Brokerage: Deutsche Bank | Rating: Hold | Target: Raised to Rs 1,100

The global investment bank observed that CASA traction remains strong, investment in digital improving efficiency. Further, a delay in economic recovery is a key downside risk for the stock. Fast, profitable growth after merger key upside risks for the stock.moneycontrol