Motilal Oswal: Kotak Mahindra Bank - Risk-Reward Unfavourable After Sharp Outperformance
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Motilal Oswal Report
Kotak Mahindra Bank Ltd. has delivered 32% returns since our October 2020 upgrade, resulting in a sharp expansion in trading multiple to 4.2 times FY22E adjusted book value – a 17% premium to its five year average multiple.
During H2 FY19-H2 FY21, the bank delivered tepid loan growth (5% compound annual growth rate, 3% excluding Emergency credit line guarantee scheme linked loans).
The management expects an improvement in asset growth after doing an exemplary job in building a robust liability franchise.
We currently estimate loan growth to sustain at 12% CAGR over FY21-23E.
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