Kotak Mahindra Bank Q3 Results Review - RoA Below ICICI Bank’s But Multiple Still Higher: Yes Securities

Yes Securities Report

We maintain a less-than-bullish ‘Add’ rating on Kotak Mahindra Bank Ltd. with a revised price target of Rs 2160:

We value the standalone bank at 2.9 times FY25 price/book value for an FY24E/25E/26E return on equity profile of 13.1/13.4%/13.9%. We assign a value of Rs 604 per share to the subsidiaries, on SOTP.

Results highlights:

Asset quality: Gross slippages amounted to Rs 11.77 billion (annualised slippage ratio of 1.3%) and recoveries and upgrades were healthy at Rs 8.3 billion.

Margin picture: NIM was stable QoQ to 5.22%, supported by proportion of advances rising in interest-earning assets.

Asset growth: Advances grew 3.2%/15.7% QoQ/YoY driven on sequential basis by healthy growth across various retail loan segments and SME.

Opex control: Total opex grew 7.1%/14.2% QoQ/YoY, staff cost grew 7%/18.3% QoQ/YoY and other expense grew 7.2%/11.5% QoQ/YoY.

Fee income: Fee income grew 5.8%/26.5% QoQ/YoY, where the sequential growth was driven by distribution and syndication fees.

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