KOTAK MAHINDRA BANK LTD - Quantamental Equity Research

Quantamental Equity Research on KOTAK MAHINDRA BANK LTD | Release: 19 Feb 2019 16:35:23 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:KOTAKBANK and BSE CODE:500247
Last Close:  INR 1283.65
Fair Value:  INR 887.9
Est. Price by Mar 19:  INR 1338.85
Market Capitalization (INR Crs):  244924.78
Industry:  Banks
Rating:  NEUTRAL
Upside:  4%
Company Profile
Kotak Mahindra Bank provides a full suite of banking services to its customers encompassing Retail Banking, Treasury and Corporate Banking in India and also has a representative office in Dubai.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 13% 127% 191%  
EBIT % 15% 88% 136%  
Earnings % 26% 104% 183%  
Book Value %  31% 128% 231%  
Stock Total Return %  29% 66% 247%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 30.01  
(B) FII/FPI 39.36  
(C) DII/Insurance Companies 9.63  
(D) Public holding < 2 lakhs of cap. 4.44  
(E) Others 16.56  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 188 226 285 330 396 689 684 886 1145 1339 1597 1827 2009 2132  
Return on Equity 17% 14% 14% 14% 13% 14% 10% 13% 12% 15% 15% 15% 14% 13%  
Price to Earning  23.1 23.8 25.8 25.0 27.0 38.1 36.3 33.0 35.2 29.0 29.0 29.0 29.0 29.0  
EVTI 4.6 5.5 6.2 6.2 6.6 8.1 8.4 8.8 9.7 9.6 9.8 9.8 9.8 9.7  
EVTIFM 23.1 23.8 25.8 25.0 27.0 38.1 36.3 33.0 35.2 29.0 29.0 29.0 29.0 29.0  
Price to Book Value 3.8 3.4 3.7 3.6 3.5 5.2 3.8 4.2 4.3 4.3 4.4 4.3 4.1 3.8  
Debt to Equity  4.5 4.5 5.1 5.6 4.5 4.7 5.4 5.3 4.9 4.8 4.5 4.1 3.7 3.3  
Dividend Yield 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%  
Cash Flow to Firm -5% -12% -8% -3% 7% -1% -18% -4% -2% -3% -1% 0% 2% 4%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales     25,131.08     29,994.23     34,722.33     38,949.97     42,294.91     44,409.65  
EBITDA     22,008.51     26,140.67     30,261.32     33,945.80     36,861.00     38,704.05  
EBIT     21,625.08     25,683.04     29,797.49     33,492.33     36,433.92     38,353.83  
PBT       9,158.23     13,216.19     15,761.33     18,029.61     19,828.26     21,040.13  
NPAT       6,200.97       8,800.40     10,495.16     12,005.56     13,203.25     14,010.21  
Price to Earning             35.18            29.03            29.03            29.03            29.03            29.03  
Price to Book Value              4.32              4.32              4.39              4.30              4.08              3.78  
Debt to Equity               4.95              4.76              4.47              4.10              3.69              3.25  
Return on Equity              0.12              0.15              0.15              0.15              0.14              0.13  
Enterprise Value to Total Income (EVTI)              9.71              9.64              9.77              9.82              9.78              9.70  
Enterprise Value to Total Income to Firm Margin(EVTIFM)          392.74          523.12          529.57          531.21          528.82          523.40  
Price or Est. Share Prices       1,144.75       1,338.85       1,596.70       1,826.50       2,008.75       2,131.55  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT     13,216.19     15,761.33     18,029.61     19,828.26     21,040.13  
Interest     12,466.85     14,036.16     15,462.72     16,605.66     17,313.70  
Depreciation          457.63          463.83          453.47          427.07          350.22  
Cash Flow Before Tax     26,140.67     30,261.32     33,945.80     36,861.00     38,704.05  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax     17,255.46     19,975.49     22,407.62     24,331.94     25,548.54  
Terminal Cash Flow                                                                                    -     685,002.03  
Total Cash Flow     17,255.46     19,975.49     22,407.62     24,331.94   710,550.57  
Present Value of Cash Flow   519,738.05  
Debt   350,326.56  
Value of Equity   169,411.49  
Fair Value Per Share          887.90  
Equity        244,925
Debt        249,840
Beta Take from Reuters 1.13
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid          12,467
Tax Benefit            4,099
Interest Net of Tax            8,368
Debt        249,840
Cost of Debt 3%
Cost of Equity 16%
Debt Weight 50%
Equity Weight 50%
WACC 9%
Cash Flow of Mar-23 E     25,548.54
Growth 4.7%
Present Value of Terminal Cashflow   685,002.03
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  HDFC Bank        2,100.65        571,478          390.72            26.56              7.32              9.07            25.14              5.38            28.58              8.58              0.59            21.43        -400.58        123,245            21.41               860              6.99            25.80            11.59            20.32          814.70
   2  Kotak Mah. Bank        1,283.65        244,925          264.60            18.33              7.93              8.36            73.20              4.85            35.62              4.95              0.05            17.94        -284.23          45,382            30.01             -139              5.93            21.18              5.53            20.70          466.09
   3  Yes Bank           219.00          50,652          111.37            19.22              7.42              6.59            13.82              1.97            11.50            10.70              1.23            16.39        -677.27          35,399            19.10               456            10.06            56.97              3.85            -6.97          218.89
   4  IndusInd Bank        1,509.50          90,965          389.38            20.96              7.97              7.52            24.32              3.88            23.36              8.09              0.49            18.35        -293.15          28,929            11.03             -188              5.98            34.45              7.04              5.21          753.59
   5  ICICI Bank           342.15        220,448          158.54              7.97              4.98              8.40            24.16              2.16            64.57              7.28              0.44              6.83            46.29          80,653                 -                 -97              7.78            19.14            76.58            -2.75          137.50
   6  Bandhan Bank           473.00          56,425            78.65            17.31            10.59            10.18            39.03              6.01            33.42              3.64              0.21            15.77       2,391.93            7,535            82.28               581              2.73            40.00          -32.07            10.40          159.74

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