Kotak Mahindra Bank (KMB IN) - Stable growth; Increasing trend in CASA continues - CSEC Research

Stable growth; Increasing trend in CASA continues

- Kotak Bank's advances grew healthy by (14.7% YoY, 5.3% QoQ) at INR 1.36tn. Growth in loan book was led by growth in CV/CE (37.5% YoY, 12.3% QoQ), Corporate Banking (21.7%YoY, -2.1% QoQ), SB, PL & Credit cards (16.3%YoY, 10.2%QoQ).

- The loan book mix was noted at; Corporate Banking - 30.6%, Commercial Vehicle/Commercial Equipment - 8%, Agriculture - 13.9%, Business Banking - 13.1%, Home Loans and LAP - 19.2%, SME, PL & Credit card - 12.8%, Others - 2.3%. Consequently the broader mix constituted of Retail advances at 40.6% and Corporate advances at 59.4%.

- Deposits registered a growth of (13.5%YoY, 5.4%QoQ) to INR 1.57tn led by growth in SA of (40.7% YoY). CASA deposits grew robustly by (31.2%YoY, 10.3%QoQ). The CASA ratio stands increased to 44% vs. 42% in 3QFY17

Valuation: KMB has shown stable and sustainable business growth. Its healthy asset quality and margin expansion paints a positive outlook for the bank. The stock is currently trading at 3.3X P/BV of FY19E. We upgrade the target price to INR 955 (Prev. Target of INR 875), assigning a 3.5x P/BV on FY19E consensus estimate and maintain OUTPERFORMER rating. Risks: Deterioration in asset quality from the acquired books of IVBL.

Shares of KOTAK MAHINDRA BANK LTD. was last trading in BSE at Rs.904.45 as compared to the previous close of Rs. 904.35. The total number of shares traded during the day was 59173 in over 1612 trades.

The stock hit an intraday high of Rs. 912.4 and intraday low of 901. The net turnover during the day was Rs. 53719822.

Source : Equity Bulls

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