Out of the 35 brokerages whose ratings and price targets are uploaded on Bloomberg, 15 have retained their price targets, while 19 raised them by 0.5% to 7.5%. The average price target of the 35 analysts at ₹2,162 is over 14% above Monday’s closing price of ₹1,893.85.
“We raise earning estimates and feel that valuations are at reasonable levels now, but still at premium to peer group and succession issues may have some overhang,” said Jefferies in a note to clients after the results.
Uday Kotak, who founded Kotak Mahindra Bank, will likely take a non-executive role soon at the private lender. His tenure as Kotak’s chief executive and managing director is set to end in December 2023.
HSBC Securities said Kotak’s earnings per share (EPS) outlook has improved, but the compounded EPS growth is still below that of peers HDFC Bank and ICICI Bank.
The brokerage said its core banking business is trading at 2.8 times FY25 estimated book value – a valuation measure – as against 2.1-2.2 times for HDFC Bank and ICICI Bank.
So far in 2023, Kotak shares have risen 3.8% as against the 6.3% gain in the Bank Nifty index.”With leverage (loans/equity) at 3.8 times, organic capital productivity is now front and centre in any discussion on valuations,” said BNP Paribas in a client note. The brokerage said it expects “valuation sensitivity to loan growth delivery.”