Should You Buy or Sell Kotak Mahindra Bank Shares? This is What Experts Have to Say

Kotak Mahindra Bank shares are trading up 1.5% at Rs1,407.80 in afternoon trade on Thursday after the lender on Tuesday said its net profit jumped 25.2% to Rs1,407.80 crore for the March quarter compared with Rs1,124.05 crore during the year-ago quarter. Net interest income (NII) also rose 18% to Rs 3,048 crore against Rs2,580 crore in the same quarter last year.

Most brokerages are bullish on the stock after the results announcement due to the bank’s strong current account and savings account (Casa) ratio, lower provisions and improving asset quality.

CLSA maintained ‘buy’ rating on the stock with a target price of Rs 1,665. The brokerage firm said since Kotak Mahindra Bank has continued to outperform peers on Casa and asset quality, the premium valuation of the stock is partly justified. It expected that a steady rise in earnings and quality will further support the bank’s premium valuation.

Global research firm Citi has a ‘neutral’ rating on the shares, with a target price of Rs 1,460. It said standalone profit after tax has come in line with consensus.

Deutshce Bank has a ‘buy’ rating on Kotak Mahindra Bank with target price of Rs1,550. Deutshce Bank said that the numbers of insurance business were a positive surprise, while the banking business remains steady. Deutsche Bank has reduced consolidated earnings estimate by 2-3% for FY20-21.

Morgan Stanley was ‘overweight’ on Kotak Mahindra Bank, with a target of Rs1,600 per share. It said the key positive was strong Return on Enterprise Value (RoEV) and higher margin in insurance business. Though, it lowered earnings forecast by 5%.

Macquarie gave an ‘outperform’ call on Kotak Mahindra Bank, with a target of Rs1,445 per share. Macquarie said it was impressed with the 52.5% Casa ratio. But it noted that the loan growth modest and lagged behind that of retail-focussed peers such as HDFC Bank.

However, global brokerage firm Jefferies downgraded the stock to ‘underperform’, saying the consolidated return-on-equity (RoE) remains capped at below 16%. According to the firm, the valuations are expensive at the current levels. Jefferies has a target price of Rs1,175 on the stock.