Brokerages bullish on Kotak Mahindra Bank post Q2 result; should you buy?
The bank had posted Rs 1,440.68 crore net profit in the July-September period of 2017-18.
By ETMarkets.com |
BCCL
NEW DELHI: Brokerages maintained their bullish view on Kotak Mahindra Bank after the private sector lender on Wednesday reported a rise of 21.3 per cent in its consolidated net profit at Rs 1,747.37 crore in the second quarter ended September this fiscal.
The bank had posted Rs 1,440.68 crore net profit in the July-September period of 2017-18.
JP Morgan maintained ‘overweight’ on Kotak Mahindra Bank with a price target price of Rs 1,400, implying a potential upside of 19 per cent from the last closing price.
The scrip was trading 0.30 per cent down at Rs 1,173.75 at around 9.30 am (IST) on BSE.
“Deposit franchise continues to show strong traction. No clarity given on way forward for reducing promoter stake,” said JP Morgan.
CLSA upgraded Kotak Mahindra Bank (KMB) shares to ‘Buy’ from ‘Outperform’. However, it cut the target price to Rs 1,420 from Rs 1,480, indicating an upside of 21 per cent from the last regular trade.
“Healthy growth in core profits, but investment provisions stood a drag. Strong CASA and capitalisation to aid share gains. We expect pick-up in earnings growth and valuations are looking reasonable for ‘Buy’,” said CLSA.
The provisions for bad loans and contingencies were raised to Rs 359.71 crore for the quarter from Rs 252.86 crore parked aside for same period previous fiscal.
The bank said provision towards advances/others (including provisions for exposures to entities with un-hedged foreign currency exposures) stood at Rs 221.31 crore for the quarter, up from Rs 205.48 crore.
On a standalone basis, the net profit of the bank rose by 15 per cent to Rs 1,141.65 crore in Q2FY19 from Rs 994.31 crore in Q2FY18.
Sharekhan in a report said, “KMB currently trades at 4.7 times its FY2020E book value. We have reduced our target multiple to align with market conditions and the overhang of possible equity dilution. That said, we find KMB as an attractive long-term investment. Thus, we maintain our positive view on the stock and expect 20 per cent to 25 per cent upside over 12-18 months.”
The bank had posted Rs 1,440.68 crore net profit in the July-September period of 2017-18.
JP Morgan maintained ‘overweight’ on Kotak Mahindra Bank with a price target price of Rs 1,400, implying a potential upside of 19 per cent from the last closing price.
The scrip was trading 0.30 per cent down at Rs 1,173.75 at around 9.30 am (IST) on BSE.
“Deposit franchise continues to show strong traction. No clarity given on way forward for reducing promoter stake,” said JP Morgan.
CLSA upgraded Kotak Mahindra Bank (KMB) shares to ‘Buy’ from ‘Outperform’. However, it cut the target price to Rs 1,420 from Rs 1,480, indicating an upside of 21 per cent from the last regular trade.
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“Healthy growth in core profits, but investment provisions stood a drag. Strong CASA and capitalisation to aid share gains. We expect pick-up in earnings growth and valuations are looking reasonable for ‘Buy’,” said CLSA.
The provisions for bad loans and contingencies were raised to Rs 359.71 crore for the quarter from Rs 252.86 crore parked aside for same period previous fiscal.
The bank said provision towards advances/others (including provisions for exposures to entities with un-hedged foreign currency exposures) stood at Rs 221.31 crore for the quarter, up from Rs 205.48 crore.
On a standalone basis, the net profit of the bank rose by 15 per cent to Rs 1,141.65 crore in Q2FY19 from Rs 994.31 crore in Q2FY18.
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Sharekhan in a report said, “KMB currently trades at 4.7 times its FY2020E book value. We have reduced our target multiple to align with market conditions and the overhang of possible equity dilution. That said, we find KMB as an attractive long-term investment. Thus, we maintain our positive view on the stock and expect 20 per cent to 25 per cent upside over 12-18 months.”
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