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Nirmal Bang Report
Kotak Mahindra Bank Ltd. Q2 FY24 results were marginally below our estimates, with net interest income/pre-provision operating profit/profit after tax coming at a variation of 0.2%/-1.5%/-2.1% versus our estimates. This was on account of lower other income due to a higher base of Q1 FY24.
Net interest margin declined sequentially from 5.57% in Q1 FY24 to 5.22% in Q2 FY24. There was one-off impact of 15 basis points on NIM due to incremental cash reserve ratio, increased liquidity and short-term inflows invested in lower yielding liquid instruments.
While the appointment of Ashok Vaswani as new Managing Director and Chief Executive Officer of the Kotak Mahindra Bank brings in clarity with respect to leadership, smooth management transition will be key.
With his vast expertise in building corporate and consumer lending businesses at a global scale, Vaswani's leadership is expected to accelerate digital and tech initiatives at Kotak Bank.
We roll forward our valuation to September-2025E adjusted book value, lowering our target multiple to three times. After adding subsidiary valuation of Rs 381 per share, we arrive at a target price of Rs 2,182 (as against Rs 2,371 earlier, valuing it at 3.1 times FY25E adjusted book value plus subsidiary value per share).
We maintain a ‘Buy' rating on Kotak Mahindra Bank.
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