CLSA has maintained an ‘Outperform’ rating on Kotak Mahindra Bank, setting a target price of ₹2,125 per share, indicating a 9.2% upside potential from the current market price of ₹1,945.50.
While the RBI’s removal of business restrictions is a sentimentally positive development, CLSA does not anticipate any material upgrade to EPS. The brokerage highlights that since the ban, Kotak’s credit card spending and loan market share declined by 50 basis points to 4%, but credit cards remain a small segment, comprising just 3% of the bank’s total loans.
CLSA estimates that the ban’s impact on overall loan growth was less than 1%, and its effect on Q3 earnings per share (EPS) would have been only 2-3%. Although the bank is now positioned to resume customer onboarding and credit card issuances, the brokerage believes Kotak will take a gradual, calibrated approach in adding new customers.
Additionally, while the lifting of restrictions on Kotak’s ‘811’ digital banking platform is a positive, CLSA estimates that this will contribute at most 1% to the bank’s overall deposit growth.
Despite the limited financial impact, Kotak’s business normalization and long-term growth prospects remain intact, keeping CLSA’s outlook positive.
Disclaimer: The above article is for informational purposes only and does not constitute financial advice. Investors are advised to consult their financial advisors before making any investment decisions.
