Exploring new horizons-Kotak Mahindra Bank


by 5paisa Research Team Last Updated: Dec 15, 2022 - 03:41 am 49.1k Views
Listen icon

Kotak Mahindra Bank-An Overview 
Kotak Mahindra Bank (KMB) is one of India's leading banking and financial services group, offering a wide range of financial services.KMB has transformed from an NBFC (non-banking financial company) into one of the fastest-growing banks in India after obtaining a banking license in 2003. The bank offers personal finance solutions from savings accounts to credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs, and provides working capital loans. Kotak has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high-net-worth individuals, entrepreneurs, business families, and working professionals. Over the years, it has entered various financial service businesses, such as securities, investment banking, life insurance, asset management, and retail banking, and it has become a leading player in domestic capital markets. 

Recent updates from the company shows that the growth appetite improved a bit in retail & SME, the large corporate lending still not big focus despite bank's low funding cost,bank is open to new opportunities, prefering credit cards, gold, & MFI loans,succession will offer scope to reorg. teams & look at fresh talent — our base case is internal elevation for CEO. Growth uptick & succession will be key to stock returns.
Bank has scaled up liability franchise well with Casa ratio of 60% but it has been conservative about growing the large corporate book due to predicted lower yields. Limited changes are found to that outlook, and even if book starts to grow from here, it may lag the retail piece. Recently, Kotak group acquired a small vehicle financing arm of Volkswagen India that gave them Rs13bn of loans (0.5% of consolidated loans) and 30k customers. Management is open to new opportunities in new areas such like credit cards, gold financing and MFI Kotak intends to acquire Citibank's India credit card business which would provide more contributions to loans.

So the quality of cross-sell to these customers will be key to value creation, with 
valuation estimated at US$2.5-3bn.As the Bank prepares for succession after retirement of Mr. Uday Kotak (Promoter and CEO) and Mr. Dipak Gupta (Jt. MD) in Dec-23, it is taking a holistic view about it. Mr. Kotak might return as non-executive director for a reasonable term (up to 8yrs) to guide the bank. Bank seems to be open to choices from inside and outside the bank and to make required changes in the team. 
There will be preference to recruit fresh talent from tech-domains. Mr. Manian (Group President, Corp & Investment banking)launched bank's consumer franchise &. Mr Shah (Group President in charge of key subsidiaries) are likely key contenders.So far, among large private banks, only Axis Bank has appointed CEOs from outside.While there is time for succession planning, pickup in growth and clarity on plans will be key to valuation re-rating. 

Parameters to kickstart investing in Kotak
The bank owned a total assests of Rs.3602517mn in FY20 which grew upto Rs.3834886 mn.Net profit increase from Rs.59472mn in FY20 to Rs.69649mn in FY21.P/E ratio is 43.Earning Per Share grew from 31 to 35 from FY20 to FY21.Like al other banks, Kotak also faced challenged due to COVID-19.But the effect is comparatively lower.

 

Share Market Today


How do you rate this article?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

378X91-D3

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.


Open Free Demat Account
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest News
Purv Flexipack IPO's Spectacular 266% Premium Debut, Hits Lower Circuit

Purv Flexipack IPO Sees Astonishing Listing

Morgan Stanley Introduces Pre-IPO Share Trading for Clients: Stay Ahead!

Morgan Stanley is setting new standards in the investment world with the introduction of pre-IPO share trading through its wealth management division, giving clients exclusive access to high-potential private companies, often termed as "unicorns," valued over $1 billion.

Platinum Industries IPO Lists at 31.58% Premium Over Issue Price

Strong listing for Platinum Industries IPO