India’s second largest private sector lender Kotak Mahindra Bank’s Q4 results has mixed views, and top brokerages remain divided on the bank’s performance. Kotak Mahindra Bank Q4 net profit jumped 25% on-year to Rs 1,408 crore, as against Rs 1,124 crore in the same period previous financial year. The bank s net interest income came in 18.1% higher on-year at Rs 3,048 crore. Taking stock of the results, global brokerage firm Jefferies downgraded the stock to Underperform, while CLSA has maintained ‘buy’ rating on the stock.
Jefferies said that the consolidated RoE remains capped at below 16%. According to the firm, the valuations are expensive at the current levels. Jefferies has a target price of Rs 1,175 on the shares. Kotak Mahindra Bank shares are trading 1% higher at Rs 1,401.85.
According to CLSA, the premium valuation of the stock is partly justified by stronger CASA and asset quality. Further, the steady rise in earnings and quality will support premium valuation, said CLSA. The lender has continued to outperform peers on CASA and asset quality. The asset quality is the bank remained stable as gross NPA as a percentage of total advances came in at 2.14% at the end of March quarter as against 2.07% in the previous quarter. The net NPAs registered a decline to 0.75% from 0.98% earlier. CLSA has retained a buy rating on the stock with a target share price of Rs 1,665.
Watch: Kotak Mahindra Bank profit jumps 25% in Q4; should you buy stock?
Global research firm Citi noted that the standalone PAT has come in-line with consensus. The net interest margin improved 15% on quarter, due to strong CASA growth, noted the firm. The higher operating expenses for the quarter were offset by lower provisions. The consolidated PAT was dragged by weak earnings growth in subsidiaries. Citi has a neutral rating on the shares, with a target stock price of Rs 1,460.
Deutshce Bank said that the numbers of insurance business were a positive surprise, while the banking business remains steady. Deutsche Bank has reduced consolidated earnings estimate by 2-3% for FY20-21. Destshe Bank has a target stock price of Rs 1,550.
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