Kotak Mahindra Bank’s net profit jumps 31% after Q3. Here’s what to do with the bank’s stock

Stock tips for Kotak Mahindra Bank as its profit jumps

Kotak Mutual Funds Net Profit Jumps

Kotak Mahindra Bank, one of the leading private-sector banks in India, published its quarterly results on 21st January 2023. Since it was a weekend, the markets were closed, and the bank’s share prices will be affected when the market reopens on 23rd January 2022 because of its results.

On Saturday, the bank beat analyst estimates with its quarterly results. Here’s how the bank performed in the third quarter of the financial year 2022-23 –

  • 31% Year-on-Year (YoY) growth in net profit that was reported at Rs.2792 crores.
  • Net interest income increased 30% YoY to Rs.5653 crores.
  • 23% YoY jump in loans lent out by the bank.
  • Net interest margin also increased to 5.47% against last year’s 4.62%.

Related - Understand what NPAs are and how they affect banks' financial performance

As the third quarterly earnings are impressive, experts are lending their views on how the bank’s stock will perform on Monday, as the market opens. If you are an existing investor in Kotak Mahindra Bank or if you are looking to add the scrip to your portfolio, here are some expert insights –

  • The stock has been rated ‘Buy’ with a target price of Rs.2100 because the bank delivered a strong quarterly performance as its core earnings amounted to Rs.26 billion. The increase in the net interest margin was attributed to the lower cost of funds which stood at 3.83%.
  • Another expert rated the stock ‘Outperform’ with a target of Rs.2080 due to a good quarter and steady growth.
  • Some experts have rated the stock ‘Market perform’ with a target of Rs.2100. They are banking on the strong growth in the bank’s margins due to healthy credit and a shift in its loan mix. Moreover, the bank’s EPS (Earnings Per Share) has also grown, which is a good sign. With increasing retail and microfinance segments and the normalization of treasury gains, the bank reported an increase in its total income.
  • A popular broking house has rated the stock ‘equal weight’ and has fixed a target price of Rs.2215. According to the broking house, the bank’s higher operating cost offset the improvement in its asset quality and margins. However, with increasing credit growth, the bank’s scrip is poised for good profits in the coming financial year.
  • A popular research house has rated the stock ‘neutral’ with a target price of Rs.2070. The research house points to the fact that the bank has reinvested its profits to meet its operating expenses. However, the bank’s asset quality has improved with negative slippage, which works for investors.

What should investors do?

As an existing or potential investor, you can opt for the stock because the bank’s growth is positive, and the improvement in margins and asset quality point to a better performance in the future too. However, align your investment with your risk profile and needs and then make an informed choice.

Related - Check out banks giving attractive interest rates on FDs

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

Kotak Mahindra Bank, one of the leading private-sector banks in India, published its quarterly results on 21st January 2023. Since it was a weekend, the markets were closed, and the bank’s share prices will be affected when the market reopens on 23rd January 2022 because of its results.

On Saturday, the bank beat analyst estimates with its quarterly results. Here’s how the bank performed in the third quarter of the financial year 2022-23 –

  • 31% Year-on-Year (YoY) growth in net profit that was reported at Rs.2792 crores.
  • Net interest income increased 30% YoY to Rs.5653 crores.
  • 23% YoY jump in loans lent out by the bank.
  • Net interest margin also increased to 5.47% against last year’s 4.62%.

Related - Understand what NPAs are and how they affect banks' financial performance

As the third quarterly earnings are impressive, experts are lending their views on how the bank’s stock will perform on Monday, as the market opens. If you are an existing investor in Kotak Mahindra Bank or if you are looking to add the scrip to your portfolio, here are some expert insights –

  • The stock has been rated ‘Buy’ with a target price of Rs.2100 because the bank delivered a strong quarterly performance as its core earnings amounted to Rs.26 billion. The increase in the net interest margin was attributed to the lower cost of funds which stood at 3.83%.
  • Another expert rated the stock ‘Outperform’ with a target of Rs.2080 due to a good quarter and steady growth.
  • Some experts have rated the stock ‘Market perform’ with a target of Rs.2100. They are banking on the strong growth in the bank’s margins due to healthy credit and a shift in its loan mix. Moreover, the bank’s EPS (Earnings Per Share) has also grown, which is a good sign. With increasing retail and microfinance segments and the normalization of treasury gains, the bank reported an increase in its total income.
  • A popular broking house has rated the stock ‘equal weight’ and has fixed a target price of Rs.2215. According to the broking house, the bank’s higher operating cost offset the improvement in its asset quality and margins. However, with increasing credit growth, the bank’s scrip is poised for good profits in the coming financial year.
  • A popular research house has rated the stock ‘neutral’ with a target price of Rs.2070. The research house points to the fact that the bank has reinvested its profits to meet its operating expenses. However, the bank’s asset quality has improved with negative slippage, which works for investors.

What should investors do?

As an existing or potential investor, you can opt for the stock because the bank’s growth is positive, and the improvement in margins and asset quality point to a better performance in the future too. However, align your investment with your risk profile and needs and then make an informed choice.

Related - Check out banks giving attractive interest rates on FDs

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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