[PDF] [PDF] Kotak Mahindra Bank - Union Budget 2021 Highlights

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26 avr 2019 · Euro Area recorded a Government Budget deficit equal to 0 50 of the The Bank of Japan left its key short-term interest rate unchanged at 

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Daily FX Rate Sheet Date 31-Mar-21 Time 2:30 PM Currency TT Buying TT Selling US Dollar USD/INR 71 74 74 67 Euro EUR/INR 84 27 87 71

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Came into being in 1970s when countries shifted from fixed exchange rate Main participants include – banks, large corporate, hedge funds, central banks

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Bank of India (RBI), announced that the exchange rate is largely determined by the Ltd Axis, Kotak Mahindra Bank Ltd, Punjab National Bank, State Bank of 

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Kotak Mahindra Bank Privileged and Web based FX live Screen for booking FX rates Only for Free Demand Drafts payable at Kotak Bank Branch locations

[PDF] Kotak Mahindra Bank - Union Budget 2021 Highlights

27 jan 2021 · Kotak Mahindra Bank reported a good set of numbers on the operating front flattish YoY due to sluggish fee income growth of 3 YoY and lower of changes in interest rates, foreign exchange rates or any other reason

[PDF] Report of the Internal Working Group on Currency Futures

volatility in exchange rates due to global imbalances and changing dimensions of the capital flows i) To examine the desirability of banks becoming members on the Exchange j) To analyse the risks Uday Kotak, Kotak Mahindra 8) Shri

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ICICI Securities

² Retail Equity Research

Result Update

January 27, 2021

CMP: | 1760 Target: | 2040 (16%) Target Period: 12 months

Kotak Mahindra Bank (KOTMAH)

BUY

Sequential growth uptick encouraging"

Kotak Mahindra Bank reported a good set of numbers on the operating front with profitability aided by healthy margins and controlled cost. Sequential pick-up in loan book is a positive and was in line with the PMQMJHPHQP·V

intent to pedal growth from here on. The bank reported steady NII growth of 16.8% YoY on the back of a sequential improvement in NIM for Q3FY21. NIM improved 6 bps on a sequential basis to 4.58% owing to lower cost of funds. Other income was flattish YoY due to sluggish fee income growth of 3% YoY and lower treasury gain. C/I ratio declined ~790 bps YoY but was up ~380 bps QoQ to

42.3% as promotional, advertisement expenses increased with increasing

business activity. The bank made provisions worth | 599 crore, up 62% QoQ, including interest reversal in lieu of stressed assets. PAT, on the back of healthy operating performance, increased 16.1% YoY to | 1853 crore. Headline GNPA and NNPA ratio declined from 2.55% and 0.64% to 2.26% and 0.50% QoQ, respectively. However, proforma based GNPA increased by 54 bps QoQ to 3.24%, while NNPA jumped 50 bps to 1.24%. Restructured book was at 0.28% of advances, still below earlier estimates. Going into next quarter, the management expects marginal restructuring. SMA 2 outstanding increased from | 133 crore to | 654 crore. Outstanding contingent provision was at | 1279 crore (~0.6% of advances). Advances growth sequentially was up at 4.5% to | 214103 crore. The pick- up in the business was encouraging. This traction is expected to continue, going ahead. Home loans were up 4.7% QoQ, CV loans by 1.8% QoQ, Corporate banking loans increased 5.8% QoQ while agri finance was up

5.95% QoQ. Disbursals under ECLGS scheme were ~| 9400 crore by

Q3FY21. Deposit growth also remained healthy at 10.8% YoY to | 265304 crore, led by 21.5% YoY rise in CASA. As a result, CASA ratio improved to

58.9% vs. 53.7% YoY and 57.1% QoQ.

Consolidated PAT was at | 2602 crore; up 11% YoY, largely driven by the bank's profit. Overall performance of subsidiaries was decent with Kotak Securities positing healthy 43.8% YoY growth in earnings to | 184 crore. Kotak AMC profitability was at | 91 crore, flat YoY. Kotak Prime, the non- banking arm, saw de-growth of 20.3% YoY in earnings at | 149 crore.

Valuation & Outlook

.0%·V ORQJ PHUP IRŃXV ŃRQPLQXHV RQ PMLQPMLQLQJ risk adjusted returns. Pick up in loan book is a positive and in line with the PMQMJHPHQP·V indication to push for growth. Adequate provision provides comfort to deal with volatility in asset quality and, thus, earnings. The bMQN·V IRŃXV RQ LPSURYLQJ liability franchisee makes it attractive. Consistent performance over a period of time, healthy return ratios and capable management are reasons for premium valuations. We upgrade our rating on the stock from HOLD to BUY with a revised SOTP target price of | 2040 (| 1950 earlier). s S | croreFY18FY19FY20FY21EFY22EFY23ECAGR (FY20-23E)

NII9532112061350015387163011891712%

PPP715883481002111872127011560316%

PAT408448655947698881101002419%

ABV188142163201225256

P/E83.8 107.3 87.9 76.5 65.9 53.3

P/ABV9.4 12.5 11.0 8.8 7.8 6.8

Consol P/E55.0 44.3 36.3 30.0 25.9 24.4

Consol P/BV6.8 6.0 5.2 4.5 4.0 3.7

RoA1.7 1.7 1.8 1.8 1.9 2.0

RoE12.5 12.1 12.9 12.4 12.0 13.1

Source: Company, ICICI Direct Research

Key Financial Summary

Particulars

ParticularsAmount

Market Capitalisation| 353713 crore

GNPA (Q3FY21)| 4928 crore

NNPA (Q3FY21)| 1064 crore

NIM (Q3FY21)4.6%

52 week H/L2026/1000

Net worth| 61914 crore

Face value| 5

DII holding (%)12.9

FII holding (%)45.1

Key Highlights

Sequential pick-up in loan book, up

4.5%. Contribution came in from all

segments

Restructuring now at 0.28% of loans

and very little is expected in next quarter

Upgrade from HOLD to BUY with

revised SOTP target price of | 2040

Risk to our call

Further increase in proforma NPA

could be a dampener

If rise in SMA2 book continues, it could

lead to higher stress formation

Research Analyst

Kajal Gandhi

kajal.gandhi@icicisecurities.com

Vishal Narnolia

vishal.narnolia@icicisecurities.com

Sameer Sawant

Sameer.sawant@icicisecurities.com

ICICI Securities | Retail Research 2

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Exhibit 1: Variance Analysis

Q3FY21Q3FY21EQ3FY20YoY (%)Q2FY21QoQ (%)Comments

NII4,006.83,964.93,429.516.83,913.22.4Healthy growth on the back of sequential pick-up in loans and rise in margins NIM (%)4.584.604.66-8 bps4.526 bpsUp QoQ as a result of controlled cost of funds, increased CASA Other Income1,334.41,502.41,341.4-0.51,452.0-8.1Flat due to YoY subdued fee and treasury Net Total Income5,341.25,467.34,771.012.05,365.2-0.4

Staff cost959.3938.21,091.5-12.1990.1-3.1

Other Operating

Expenses1,298.61,194.11,291.40.61,077.720.5Increased on QoQ basis due to promotional, advertisement, etc

PPP3,083.33,335.12,388.129.13,297.5-6.5

Provision599.0841.1444.034.9368.662.5Remained elevated due to Covid related provisions

PBT2,484.32,494.01,944.127.82,928.9-15.2

Tax Outgo630.8623.5348.281.2744.4-15.3

PAT1,853.51,870.51,595.916.12,184.5-15.1Cost control and topline growth aid PAT

Key Metrics

GNPA4,928.05,496.05,413.0-9.05,336.0-7.6Proforma GNPA increased from 2.7% to 3.2% Advances214,103210,271216,774-1.2204,8454.5Sequential pick-up contributed largely by home loan and corporate Deposits265,304269,273239,35410.8261,5641.4Driven by healthy CASA growth

Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

FY23E (| Crore)OldNew% ChangeOldNew% ChangeIntroduced Net Interest Income14,04315,3879.615,457.216,300.95.518,917.1 Pre Provision Profit10,748.111,871.810.512,122.412,700.84.815,603.5

NIM (%)4.44.842 bps4.44.624 bps4.6

ABV (|)202.7200.6-1.1226.2224.9-0.6256.0

FY21EFY22E

Source: Company, ICICI Direct Research

Exhibit 3: Assumption

FY19FY20FY21EFY22EFY23EFY21EFY22E

Credit growth (%)21.26.84.215.115.14.215.1

Deposit growth (%)17.316.411.314.914.98.117.4

NIM calculated (%)4.14.54.84.64.64.44.4

Cost to income ratio (%)47.446.941.442.439.443.843.5

Slippage ratio (%)1.21.71.91.21.21.31.2

Credit cost (%)0.471.011.090.690.711.00.6

EarlierCurrent

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 3

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Exhibit 3: Valuation (|)

CompanyValue / share

KMB (Merged entity)1715

Kotak Life (assumed 100% stake)112

Kotak Mahindra Prime85

Kotak Mahindra Capital25

Kotak Securities81

Kotak AMC55

SOTP target (post discount)2040

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 4

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Conference call highlights

Business

Sequential growth in loans to continue ahead

Density of branches required would be less. Hence, a measured approach would be taken while adding more branches ECLGS disbursement was | 9400 crore by Q3FY21 and has crossed ~| 9700 crore by January 2021 The bank disbursed to ~50-60% of eligible accounts in ECLGS Demand for construction equipment has been good and disbursement in this segment is better than previous quarter

Asset quality

Total ~40-45% of proforma NPA came in from unsecured retail book Collection has reached pre-Covid levels for secured book and is near pre-Covid level for unsecured book and improving month on month Full provisioning on interest reversal, including proforma NPA, has been provided through P&L Bus segment (10-15% of CV book) continues to remain under stress

Write-off during the quarter were negligible

GNPA in Kotak Prime was 2.46% while, on a proforma basis, it was over 4%

Others

TD less than | 1 crore would be ~| 70000 crore

The management expects sustainable cost reduction and higher yield to support margins

Unsecured loans are ~6% of loans

Credit cost including interest reversal was ~120 bps and excluding that it was ~86 bps

ICICI Securities | Retail Research 5

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Story in Charts

Exhibit 4: Sequential uptick in loan growth seen ahead

Source: Company, ICICI Direct Research

Exhibit 5: Loan book movement

| croreQ1FY20Q2FY20Q3FY20Q4FY20Q1FY21Q2FY21Q3FY21Growth yoy (%)Proportion (%)Growth qoq (%) CVs and contruction eqmt.19910196881899319253184421836318685-28.7-1.6 Personal Loans incl small business33719348523563634294316713211732633-815.2-8.4 Home loans42243443714603146881471684773249977923.38.6 Corporate banking 81418823748342384855761677423778577-636.7-5.8 Agricultural finance259862706827736287572705129077308011114.411.1

Source: Company, ICICI Direct Research

Exhibit 6: NIM continues upward trajectory

Source: Company, ICICI Direct Research

336230

386445

0 50000

100000

150000

200000

250000

300000

350000

400000

450000

Q2FY18Q3FY18

FY18

Q1FY19Q2FY19Q3FY19

FY19

Q1FY20Q2FY20Q3FY20

FY20

Q1FY21Q2FY21Q3FY21FY21EFY22EFY23E

(| crore)

AdvancesDeposits

4.37

4.474.49

4.6 4.5 4.3 4.2

4.44.3

4.2 4.3

4.54.5

4.64.74.7

4.4

4.54.6

4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 NIM

ICICI Securities | Retail Research 6

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Exhibit 7: Branch addition remains muted

Source: Company, ICICI Direct Research

Exhibit 8: Asset quality trend

Source: Company, ICICI Direct Research

Exhibit 9: Consolidated performance over quarters

Kotak Bank10251142129114081360172415961267124421841854

Kotak Securities13011299111110149128163169199184

Kotak Mahindra Capital251432145140-761438

Kotak Prime13915713916415317218716168133149

Kotak AMC & Trust5152767573859188718491

International Subsidiaries334737322934263054455

Kotak Investment advisors/ others281311151722428352831

Kotak Mahindra Investments4845407363676477437468

Kotak Mahindra Life Insurance117127125138134144166165161171167 Total (net off aflliates/minority)15741747184420381932240723491906185329472602

Source: Company, ICICI Direct Research

Exhibit 10: Kotak Prime key financials

PBT26627424023523425020393179201

PAT15713916415317218716168133149

-car loans in same20740201912027119554190411799817480161431612817480

CAR 18.218.919.420.12122.624.326.226.629.7

ROA 21.82.222.32.62.312.22.4

NET NPA0.40%0.43%0.44%0.54%0.56%0.61%0.60%1.07%1.30%0.90%

Source: Company, ICICI Direct Research

Exhibit 11: Life insurance performance

Premium (| crore) Mar-19Jun-19Sep-19Dec-19Mar-20Jun-20Sep-20Dec-20 Total Premium1823.00.02190.0-1005.0-2225.01207.02401.02623.0 Indvl Regular723.0840.0353.01564.02479.0222.0337367 Individual Renewal1604.01640.01013.02645.03865.0569.012261378

Solvency Ratio (%)3.03.03.13.02.93.03.03.0

PAT138.0134.0144.0166.0165.0161.0171167

Source: Company, ICICI Direct Research

1250
1300
1350
1400
1450
1500
1550
1600
1650

2.32.32.22.22.12.22.22.32.52.3

2.72.62.3

3.23.02.8

1.11.00.90.80.70.80.70.90.90.70.90.60.5

1.51.71.7

-0.1 0.3 0.7 1.1 1.5 1.9 2.3 2.7 3.1 3.5

Q3FY18

FY18

Q1FY19Q2FY19Q3FY19

FY19

Q1FY20Q2FY20Q3FY20

FY20

Q1FY21Q2FY21Q3FY21FY21EFY22EFY23E

ICICI Securities | Retail Research 7

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Exhibit 12: Du point analysis ( Standalone)

FY17FY18FY19FY20FY21EFY22EFY23E

Net interest income/ avg. total assets4.04.03.94.04.03.83.8 Non-interest income/ avg. total assets1.71.71.61.61.31.31.4 Non-operating profit/ avg. total assets5.75.75.55.65.35.15.2 Operating expenses/ avg. total assets2.82.72.62.62.22.22.0 Operating profit/ avg. total assets2.93.02.93.03.12.93.1 Provisions/ avg. total assets0.40.40.30.70.70.40.4

Return on avg. total assets1.71.71.71.81.81.92.0

Leverage7.97.47.27.36.86.56.5

Return on equity13.212.512.112.912.412.013.1

Source: Company, ICICI Direct Research

Exhibit 13: Shareholding Pattern

(in %)Sep-19Dec-19Mar-20Jun-20Sep-20Dec-20

Promoter30.030.029.926.126.126.0

FII40.239.839.242.242.245.1

DII12.312.412.615.314.912.9

Others17.617.918.316.516.816.0

Source: Company, ICICI Direct Research

Exhibit 14: Price Chart

Source: Company, ICICI Direct Research

0 2000
4000
6000
8000
10000
12000
14000
16000
0 500
1000
1500
2000
2500

Kotak BankNifty Index

ICICI Securities | Retail Research 8

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Financial summary

Exhibit 15: Profit and loss statement | crore (Year-end March) FY19FY20FY21EFY22EFY23E Interest Earned23890.126929.628189.830482.835224.2 Interest Expended12684.213429.912802.914181.916307.0 Net Interest Income11205.813499.715386.916300.918917.1 growth (%)17.620.514.05.916.0

Non Interest Income4657.25372.14863.45740.66825.9

Net Income15863.018871.820250.322041.425743.0

Operating expense7514.88850.98378.59340.610139.6

Gross profit8348.210020.811871.812700.815603.5

Provisions962.42216.22492.01815.42147.8

Taxes2520.51857.52391.92775.83431.2

Net Profit4865.35947.26988.08109.610024.4

growth (%)19.122.217.516.123.6

EPS16.720.423.527.233.7

Source: Company, ICICI Direct Research

Exhibit 16: Key Ratios

(Year-end March) FY19FY20FY21EFY22EFY23E

Valuation

No. of Equity Shares290.9291.3297.8297.8297.8

EPS (|)16.720.423.527.233.7

BV (|)147.5168.3212.4239.6273.3

ABV (|)142.2162.9200.6224.9256.0

P/E107.387.976.565.953.3

P/BV12.611.08.98.07.0

P/ABV12.511.08.87.86.8

Yields & Margins (%)

Yield on avg earning assets8.88.98.98.68.6

Avg. cost on funds5.34.84.04.04.0

Net Interest Margins4.14.54.84.64.6

Avg. Cost of Deposits5.34.94.14.14.2

Yield on average advances9.89.99.89.69.6

Quality and Efficiency (%)

Cost / Total net income47.446.941.442.439.4

Credit/Deposit ratio91.183.678.378.478.6

GNPA2.22.33.23.02.8

NNPA0.80.71.51.71.7

ROE12.112.912.412.013.1

ROA1.71.81.81.92.0

Source: Company, ICICI Direct Research

Exhibit 17: Balance sheet | crore (Year-end March) FY19FY20FY21EFY22EFY23E

Sources of Funds

Capital (incl PCNPS)1454.41456.51489.01489.01489.0

ESOPS2.22.22.22.22.2

Reserves and Surplus41444.047558.861764.169873.779898.2 Other Liabilities & Provisions11143.010419.711720.412999.314428.4

Applications of Funds

Fixed Assets1651.61623.12152.62469.22777.7

Cash with RBI & call money24675.553292.354110.755084.456250.2

Source: Company, ICICI Direct Research

Exhibit 18: Key ratios (%) (Year-end March) FY19FY20FY21EFY22EFY23E

Total assets17.815.412.714.014.2

Advances21.26.84.215.115.1

Deposits17.316.411.314.914.9

Total Income19.913.22.39.616.1

Net interest income17.620.514.05.916.0

Operating expenses16.917.8-5.311.58.6

Operating profit16.620.018.57.022.9

Net profit19.122.217.516.123.6

Book value14.514.329.012.814.0

EPS-22.022.114.916.123.6

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 9

ICICI Direct Research

Result Update | Kotak Mahindra Bank

Exhibit 19: ICICI Direct coverage universe (BFSI)

CMPM Cap

(|)TP(|)Rating(| Bn)FY20FY21EFY22EFY20FY21EFY22EFY20FY21EFY22EFY20FY21EFY22EFY20FY21EFY22E BoB (BANBAR)7670Hold3071.24.37.164.317.710.70.70.60.60.10.20.30.92.74.4 SBI (STABAN)298290Hold257116.319.128.918.31610.31.51.41.20.40.40.66.47.19.9 Indian Bank (INDIBA)9088Hold9922.633.733.24.02.72.70.40.30.30.40.50.45.57.87.3 Axis Bank (AXIBAN)680710Buy20585.810.625.611864.026.62.52.52.40.20.30.72.13.58.0 City Union (CITUNI)174130Hold1368.410.010.020.717.417.43.02.62.21.01.21.39.411.211.9 DCB Bank (DCB)116130Buy3610.911.014.010.710.58.31.21.21.00.90.91.111.310.411.8 Federal Bank (FEDBAN)7890Buy1546.37.77.912.410.19.91.31.21.10.80.90.89.811.110.4 HDFC Bank (HDFBAN)1,4661,700Buy807647.955.965.630.626.222.34.84.23.61.91.91.916.416.717.1 IndusInd Bank (INDBA)9401,050Hold72863.732.550.914.828.918.52.01.91.81.50.81.114.46.69.3 J&K (JAMKAS)2925Hold19-16.07.510.4-1.83.92.80.50.40.3-1.10.50.6-17.58.110.6 Kotak Bank (KOTMAH)1,7602,040Buy352720.423.527.286.275.064.610.88.87.81.81.81.912.912.412.0 Bandhan (BANBAN)341370Hold54918.114.724.718.823.213.83.73.93.13.92.33.222.115.021.9 IDFC First (IDFBAN)5045Buy254-6.00.81.5-8.463.733.01.71.71.6-1.90.30.5-18.72.74.7 Sector / CompanyRoE (%)RoA (%)EPS (|)P/E (x)P/ABV (x)

Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 10

ICICI Direct Research

Result Update | Kotak Mahindra Bank

RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head ² Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai ² 400 093

research@icicidirect.com

ICICI Securities | Retail Research 11

ICICI Direct Research

Result Update | Kotak Mahindra Bank

ANALYST CERTIFICATION

I/We, Kajal Gandhi, CA, Vishal Narnolia, MBA and Sameer Sawant, MBA Research Analysts Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report

accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is

quotesdbs_dbs14.pdfusesText_20