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Nirmal Bang Report
Domestic brokerage Nirmal Bang remain positive on Kotak Mahindra Bank Ltd. after its posted its Q4 FY26 results, due to its higher than industry loan growth and healthy RoAs of +1.9% over FY26-FY28.
The brokerage has maintained a ‘Buy' rating on Kotak Mahindra Bank, implying a potential upside of 18% from the current market price.
The brokerage highlighted that Kotak Mahindra Bank's Q4 FY26 results were in line with estimates on net interest income, but pre-provision operating profit was below brokerage's estimates at 4.1%, and PAT was higher than estimates by 3%. PAT grew 13.4% YoY/16.8% QoQ to Rs 4,026 crore.
Gross advances grew 16.2% YoY to Rs 5,40,000 crore on the back of 14%, 8% and 22% YoY growth in consumer banking, commercial banking, and wholesale banking, respectively.
Deposits grew 15% YoY to Rs 570 crore on the back of 18%, 17%, 16%, and 17% YoY growth in CA, fixed rate SA, TDs, and floating rate SA, respectively.
Net interest margin improved by 13 basis points QoQ to 4.67%. Asset quality improved further with GNPAs declining from 1.30% to 1.20% sequentially.
The brokerage has estimated an earnings CAGR of 18% over FY26-FY28E, which results in RoA/RoE of 2%/12.1% in FY28E.
The brokerage has valued the standalone business at 2x Mar-28E adjusted book value (same as earlier), which is at a discount of 45% to its 5-year mean P/ABV of 3.7x.
Adding subsidiary value per share of Rs 122, Nirmal Bang derives its target price of Rs 454 (Rs 452 earlier).
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