Kotak Mahindra Bank gains post Q1 results; should you invest?

Shares of Kotak Mahindra Bank were trading higher in Tuesday's trade after the lender on Monday reported 32.71 per cent year-on-year (YoY) rise in standalone profit at Rs 1,360 crore for the quarter ended June 30.

The lender had posted a profit of Rs 1,024.94 crore in the corresponding quarter last year.

Provisions and contingencies declined 32.55 per cent YoY to Rs 316.76 crore during the quarter under review. However, the figures jumped 84.96 per cent on a quarterly basis.


Net interest income (NII) of the bank increased 23 per cent YoY to Rs 3,173 crore. Net Interest Margin increased to 4.49 per cent during the quarter under review against 4.28 per cent in Q1FY19.

Asset quality of the lender remained almost stable with percentage of gross NPAs inching higher to 2.19 per cent as of June 30 against 2.14 per cent in the preceding quarter. Percentage of net NPAs came in at 0.73 per cent against 0.75 per cent sequentially.

Brokerage firm YES Securities maintained ‘Add’ on Kotak Mahindra Bank shares with a 12-month target price of Rs 1,570.

“On standalone basis, Kotak Mahindra Bank (KMB) delivered a reasonably strong operating performance in Q1 FY20. Core PPOP grew 21 per cent YoY and core PPOP margin was stable at 2.9 per cent. Asset quality was well under control. SMA-2 outstanding remains negligible at 16 bps of advances and core PCR stays healthy at 67 per cent,” the brokerage house said.

Edelweiss Securities retained ‘Buy’ call on Kotak Mahindra Bank with a revised target price of Rs 1,632 (Rs 1576 earlier). “Kotak delivered a steady Q1FY20, reinforcing our view that its earnings momentum would sustain in spite of the challenging environment,” the brokerage house said.

The shares of the lender closed 2.76 per cent higher at Rs 1493.70 on BSE.