Kotak Bank Q4 Result
5/15/2020 9:30:18 PM
Q4FY20 highlights: (a) slower growth across segments – CV/CE (+1.5% QoQ), PL/CC (-2% QoQ), mortgages steady
(2% QoQ, 15% YoY), consol loans flat QoQ; (b) avg CA/SA (21%/17% YoY) was strong, SA (ex-wholesale) up 34%
YoY; (c) slippages at Rs 4.9bn (-54% QoQ), GNPA down 7% QoQ, Rs 6.6 bn benefit from moratorium; (d) C/I (46%)
was lower due to lower staff costs (-11% QoQ); (e) insurance EV up 15% YoY at Rs 84 bn for FY20, VNB down
20% YoY, margin at 29% (vs 37% in FY19), capital markets PAT up 20% YoY in a weak environment, Kotak Prime auto
loan de-grew 10% YoY.
Upgrade to ADD with SOTP-based TP of Rs 1,275 (2.8x FY22E P/BV on core bank): With its funding costs now being
the best, it can strive to grow amongst best corporates. On assets, its remains focused on risk adjusted returns. A lower
funding costs coupled with strong capitalization will open up a lot of opportunities. Subsidiaries continue to do well –
insurance and AMC gaining market share with better profitability, while capital markets remain steady. We raise credit
costs which are more than offset by better NIM and lower costs. Upgrade to ADD with a TP of Rs 1,275, valuing the
core Bank at 2.8x P/B.
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