-------- Forwarded Message --------
Subject: Kotak Bank: Q1FY16 Result Is In Line With Merged
Estimates---Only Sustaining Abv 715-720 TGT May Be 745-800-850,
Otherwise 680-616-572 Might Be On The Card
Date: Mon, 10 Aug 2015 08:49:57 +0530
From: Asis Ghosh <asis...@gmail.com>
Reply-To: asis...@gmail.com
To: undisclosed-recipients:;
_*Technical Analysis (Time & Price):*_
KMB (CMP:705) has to sustain at least over 715-720 zone for an immediate
to short term target of 737-745 area. Only consecutive closing above
745, it may scale 800-850 in the near term (bullish case scenario).
On the downside, inability to sustain above 715, might result selling in
KMB and it may fall to 695-680 immediately. Only consecutive closing
below 680, it may further fall to 658-645 and sustaining below that
628-616 & 595-572 might be on the card in the near term (worst bear case
scenario).
_*Technical Trading Levels(Positional):*_
SL</>5 FROM SLR
KOTAKBK CMP 705
T1 T2 T3 T4 T5 T6 T7 SLR
Strong > 720 737 745* 759 781 800 811
828-850 <715
Weak < 715 695 680* 658 645* 628 616
595-572 >720
_*Some Inputs:*_
Q1 result of KMB is by & large in line with street estimates as merged
entity (with ING). Although NP declined by almost 56% to Rs.190 cr
against Rs.430 cr (YOY- Standalone), there is one time various
integration costs of nearly Rs.432 cr due to merger with ING Vysya
Bank. If we do not consider this one time exceptional cost, the bottom
line should be Rs.622 cr (190+432). Similarly restructured assets had
grown manifold because of ING contribution of around 65% of total
stressed assets.
Consolidated NP also declined by around 26% to Rs.517 cr (including all
the other subsidiaries) and NIM (Q1) also fall drastically to 4.29% from
5%, while on brighter side, NII increased by 43% (consolidated) & 60%
(standalone-YOY). Analysts are expecting an average NII of around 4.2%
for the next five years for the merged entity (KMB+ING). The cost to
income ratio of the merged entity was higher than street estimates of
65% in Q1. The KMB management is looking to reduce it to near 50% by
2016-17, while analysts are skeptical about it and are expecting a
figure of around 56%-50% in FY17-FY18.
Looking ahead, the company is expecting an incremental credit costs in
the remaining nine months for around 50 bps due to transfer of
NPA/stressed assets from ING to Kotak loan book and also expecting
normalization after FY16. Most of the stressed assets from ING are of
corporate NPA(s) and the KMB is persuading active loan recovery through
various resolutions & CDR. As on June'15, the total loan book of the
merged entity stands around Rs.1.03 lakh cr, which is an increase of
over 80% due to ING merger and the management is expecting a steady
growth of 15-20% in it in the days ahead. The management expects that
the total integration process/costs will be over by FY16 & by FY17, we
should see fully normalised merged entity and operations. They will also
gradually expand branches from the present strength of combined 1260
branches & 1942 ATM(s).
With the merger of ING, there will be significant increase of presence
for the KMB in southern India, which may be termed as "growth engine" of
"Shinning India". Due to higher rate of interest of SB A/C offered by
Kotak, we may see a sequential higher deposits for ING customers also
and the average revenue per branch of KMB will be higher too.
In Q1, loans to provision ratio is around 0.8% against Kotak's own
historical ratio of 0.3%. Analysts are projecting an average ratio of
0.6% for the next five years. Going ahead, KMB has to outperform this
key metric for further upside potential as par scrip price is concerned.
*_Techno Funda Valuation As Par BG Metrics (Modified):_*
Considering the average historical EPS of ING, which was around 33 and
average industry PE of private banks (21.19) along with Kotak's own
historical EPS, the valuations of KMB might be around:
Current median valuation: 815
Projected fair valuations: 900-960-1060 (FY:16-18)
SCRIP EPS(TTM) BV(Act) P/E(AVG) LONG TERM SHORT
TERM MEDIAN VALUE
KOTAKBANK 45.67 121.55 21.19 790.70 826.35 808.53
KOTAKBANK 55.6 140.5 21.19 872.44 911.78 892.11 646.05
KOTAKBANK 63.55 161.65 21.19 932.73 974.78 953.76 646.05
KOTAKBANK 78.05 185.95 21.19 1033.68 1080.28 1056.98
646.05
_*Technical Charts:*_
<http://4.bp.blogspot.com/-1T5-MOoC9zk/VcgUpP2THhI/AAAAAAAADsY/gft2ulgxlTQ/s1600/KOTAK-07-08-2015.png>
<http://3.bp.blogspot.com/-dGA8uGwiww4/VcgUry92BYI/AAAAAAAADsg/CQZpRB2-4x4/s1600/KOTAK-FIBB-07-08-2015.png>
<http://3.bp.blogspot.com/-4mx6XQ_bFtc/VcgUt0Li93I/AAAAAAAADso/CQg-BLh4p5U/s1600/KOTAK-WK-07-08-2015.png>
<http://4.bp.blogspot.com/-xGk_m1tLHFc/VcgUv3aiM9I/AAAAAAAADsw/rnnfEX1UM6I/s1600/KOTAK-TL-07-08-2015.png>
<http://1.bp.blogspot.com/-m6faqKRsll8/VcgUyyeER_I/AAAAAAAADs4/riNZmcWwoHs/s1600/KOTAK-PATTERN-RSI-07-08-2015.png>
<http://3.bp.blogspot.com/-lirZcW6WgHk/VcgU1sMEotI/AAAAAAAADtA/nNafdWZ9rKg/s1600/KOTAK-PATTERN-MT-07-08-2015.png>
--
Thanks & Regards,
Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified
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