Please refer to important disclosures at the end of this report
Kotak Mahindra Bank (KMB) is one of the leading mature private sector bank
having business interests across most financial services products. Post receiving a
licence in 2002, grew to a loan book size of `136082cr in FY17.Retail loans
form ~50% of total loans, enabling KMB to earn the best NIM in the industry at
4.5-4.9% led by high yielding retail loans. NII has grown from `1858cr in FY10
to `8126cr by FY17, supported by strong credit and savings deposit growth. With
the ING Vysya Bank merger, composition of the loan portfolio has been altered
with retail advances proportion declining to ~41% from 50% earlier.
Demonetisation, in Q3FY17, further provided impetus to CASA growth, which
increased at `71768cr as of Q1FY18. CASA ratio improved from 28-29% in the
past to ~44%. With the integration of ING Vysya Bank, GNPA surged QoQ by
~40 bps at 2.3% in Q1FY16 owing to incremental addition of stressed assets. In
Q1FY18, GNPA was at 2.6% (`3726.6cr) & NNPA was 1.2% (`1777.9cr) almost
flat QoQ. Completion of integration of ING Vysya Bank has started to benefit the
bank in terms of customer acquisition as well as cross selling opportunities.
Momentum in life insurance and securities business is expected to continue
ahead. Further, incremental capital will enable to explore organic and inorganic
growth opportunities. It has shown good consistent profit growth of 21.89% over
5 years KMB has a RoE 13.45% and is trading at a valuation P/BV of 4.78x of
FY17 earnings. Hence BUY.
CMP `970
52 Week High / Low
Avg. Daily Volume
Market Cap (` cr)
BSE Sensex
Face Value (`)
Reuters Code
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Kotak Mahindra Bank Ltd
Others | Bank
August 21, 2017
Kotak Mahindra Bank Ltd |Bank
June 5, 2017
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Disclosure of Interest Statement Kotak Bank
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)