Kotak Mahindra Bank estimated the total impact of the RBI ban at a minimal Rs300-500 crore at the PBT level (2% of F26 PBT at the top end)JP Morgan upgraded Kotak Mahindra Bank (KMB) to overweight from neutral, citing supportive valuations post recent RBI actions and senior management departure.
The target price has been raised to Rs 2070 per share, marking a 34 percent increase from the last close.
JP Morgan raised F25/26E EPS of Kotak Bank, considering improved ROAs (F25/26 at 2.47/2.5% vs. earlier <2.3%).
With consistent EPS upgrades over the past year, valuations appear cheap at 10x F26E parent bank P/E.
Kotak Mahindra Bank faced pressure in recent sessions due to the RBI's ban on new customer onboarding through online and mobile banking, along with the suspension of issuing new credit cards.
Kotak Mahindra Bank estimated the total impact of the RBI ban at a minimal Rs300-500 crore at the PBT level (2% of F26 PBT at the top end)
JP Morgan upgraded Kotak Mahindra Bank (KMB) to overweight from neutral, citing supportive valuations post recent RBI actions and senior management departure. The target price has been raised to Rs 2070 per share, marking a 34 percent increase from the last close.
JP Morgan stated that the impact after RBI action on F25/26 growth should be minimal. In Q4, the bank demonstrated strong core operating metrics, with headline profit adjusted for one-offs surpassing JPMe by 8 percent. Core PPOP growth stood at +% 12y/y, accompanied by significant fee growth.
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Kotak Mahindra Bank estimated the total impact of the RBI ban at a minimal Rs 300-500 crore at the PBT level (2 percent of F26 PBT at the top end). During the analyst call, KMB expressed confidence in sustaining growth faster than the system, aiming for 1.5-2x nominal GDP, with F25 advances growth at -20 percent. Asset quality remains strong, and despite NIMs decreasing throughout the year, ROAs have remained steady. The new CEO prioritized strengthening core technology and resilience. Notably, KMB's tech spending at 10 percent of opex compares favorably with large peers, although the absolute numbers may be lower due to scale.
"We believe KMB can continue to compound balance sheet at 16% CAGR over next 2 years and even factoring ROA normalization down (from F24 2.6%) we think bank earnings can compound at 16-17% CAGR over next 2 years with scope for upside driven by better opex control. Valuations at 10x F26E parent P/E are compelling for what is a high quality and growth compounding franchise", JP Morgan said in its note.
JP Morgan raised F25/26E EPS of Kotak Bank, considering improved ROAs (F25/26 at 2.47/2.5% vs. earlier <2.3%). KMB shows flexibility in opex to offset margin pressures. With consistent EPS upgrades over the past year, valuations appear cheap at 10x F26E parent bank P/E. On consolidated earnings, the stock's F25/26E P/E ratios look favorable at 15x/12x for a 16% EPS CAGR, it said.
Kotak Mahindra Bank faced pressure in recent sessions due to the RBI's ban on new customer onboarding through online and mobile banking, along with the suspension of issuing new credit cards. Additionally, the resignation of joint managing director KVS Manian, after 29 years of service, further impacted the bank.
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