Brokerages bullish on Kotak Bank post Q3; Should you invest?

Leading brokerages maintained their bullish stance on Kotak Mahindra Bank after it posted a 23 per cent rise in net profit at Rs 1,291 crore for the third quarter ended December on higher net interest income.

The lender posted a standalone net profit of Rs 1,053 crore in the corresponding quarter last year.

Global brokerage firm CLSA retained ‘Buy’ on the bank with a price target of Rs 1,500. CLSA believes that the bank can deliver a healthy 21 per cent earnings CAGR over FY18-21.

Total income increased to Rs 7,214.21 crore from Rs 6,049.02 crore in the year-ago period.

During the quarter, gross non-performing assets (NPAs) eased to 2.07 per cent of the total advances compared with 2.31 per cent for Q3 2017-18. Net NPAs declined to 0.71 per cent of the assets in October-December 2018, against 1.09 earlier.

Macquarie maintained ‘Outperform’ rating with an upward target price of Rs 1,450 (Rs 1,325 earlier). Loan growth of the private lender was driven by CVs, personal loans and corporate banking.

The scrip was trading 2.11 per cent up at Rs 1,294 at around 9.30 am while the Sensex was down 134 points, or 0.37 per cent, at 36,444.

Morgan Stanley retained ‘Equal weight’ on the scrip with a target price of Rs 1,365. It said consolidated earnings were below estimates, mainly driven by lower earnings at subsidiaries.

On a consolidated basis, the bank's profit jumped 13.5 per cent to Rs 1,844 crore from Rs 1,624 crore in the same period a year before.

Citi maintained ‘Neutral’ view on Kotak with a target price of Rs 1,340 whereas Edelweiss has ‘Buy’ with a revised target price of Rs 1,446 (Rs 1,413 earlier).