Should you buy shares of Kotak, ICICI banks after Q2 business results?

Kotak Mahindra Bank and ICICI Bank will be the focus of this week’s session following their Q2 results. Both banks recorded strong net interest income, while their asset quality further improved during the quarter. LKP Securities issued a ‘buy’ recommendation on both stocks in the banking sector due to its stable balance sheet, stable margins and strong interest income. The stockbroker sees a 21% upside potential in these two stocks.

This week, warehouse market will be closed on 24th and 26th October due to Diwali festival. While trading will resume on October 25 and beyond on October 27 and 28.

Kotak Mahindra Bank:

In Q2FY23, the bank recorded a net profit of 2,580.68 crore up 27% yoy, while net interest income increased 26% yoy 5.099 crore. Asset quality improved with a gross NPA of 2.08% in the aforementioned quarter from 2.24% in the June quarter 2022 and 3.19% in the September 2021 quarter. 17% in Q2FY23.

In a research note, analyst Ajit Kumar Kabi at LKP Research said, “We believe the bank will further improve profitability thanks to higher growth, strong margins, and strong non-interest income. and lower provisioning. We recommend BUY factoring as best benefit – ROA class above 2%.”

On valuation, Kabi added, “we expect KMB’s loan book to grow at a CAGR of ~22% y/y 22-24E. At CMP it is 1903, stock is available at 4.1(x) independent FY24E adjusted BVPS of 463. Valuation of an independent legal entity with BVPS 4.8xFY24E and its subsidiaries valued at 84; we reach the target price of 2,304 (unchanged). We recommend a BUY rating with 21% upside potential. “

On BSE, Kotak Bank closes at 1902.90 each increased 2.05% on Friday. The bank’s market capitalization is almost 3.78 lakh crore.

So far in 2022, the stock is up more than 4%. However, in a year, the stock has dropped more than 11%. On October 21 of last year, the stock was close to 2,146 each.


This lending company recorded 37% yoy growth in net profit to 7,558 crore in Q2FY23, while net interest income (NII) stood at 14,787 crore up 26% over the same period. The bank’s asset quality improved during the quarter, while both advances and deposits posted double-digit growth.

Furthermore, the bank’s gross NPA improved to 3.19% in Q2FY23 compared to 3.41% in Q1FY23 and 4.82% in Q2FY22. Net NPA improved better to 0.61% in Q2FY23 compared to 0.70% in Q1FY23 and 0.99% in Q2FY22.

In the second quarter, bank deposits increased 12% year-on-year to 1,090,008 crore. The total amount of advance stands at 938,563 crore, up 23% over the same period last year.

In a separate research note, Kabi said, “including steady balance sheet growth and credit costs of 1% in FY23E, we estimate FY23 ROA and ROE. year of the bank is 1.8% and 15% respectively.

Kabi added, “We expect the company’s loan book to grow at a CAGR of 20% in FY 22-24E, led by technology initiatives. Credit cost standardization in progress We estimate ROA/ROE returns of 1.8% and 15% for fiscal year 23E We evaluate independent entity with 3xFY24E BVPS ( 320) and investments in subsidiaries and joint ventures ( 138 per share); we reach the target price of 1,097. We recommend BUY with a potential gain of 21%. “

On BSE, ICICI Bank shares closed at 907.15 each increased 2.13% on Friday. The bank’s market capitalization is over 6.32 lakh crore.

Up to now, ICICI Bank shares have increased by nearly 19%. In a year, the increase is about 20% as of now.

Disclaimer: The views and recommendations given above are those of individual analysts or brokerage firms, not those of Mint.

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