Kotak Mahindra Bank stock slips over 3% ahead of Q1 results

Shares of Kotak Mahindra Bank fell more than 3 percent intraday on July 22 despite brokerages indicating the lender is expected to report healthy numbers for the June quarter.

The sharp fall could be attributed to correction in other major lenders like HDFC Bank and RBL Bank.

The failure or default on repayment of interest on debts by select major corporates raised concerns over expected asset quality in coming quarters.

The stock was quoting at Rs 1,460.25, down Rs 39.55, or 2.64 percent on the BSE at 13:02 hours IST.

Country’s third largest private sector lender by market capitalisation is expected to report healthy year-on-year growth in profit and net interest income, with stable asset quality on sequentially in Q1.

Profit growth in Q1 could be up to 40 percent on fall in provisions, and net interest income over 20 percent compared to a year-ago with stable NIM and strong loan growth.

“Most metrics like business growth, CASA, NIMs and earnings will be strong, while we also don’t see major hiccups in asset quality with credit cost close to 50-55bps,” said Prabhudas Lilladher that expects 35 growth in profit and 22 percent in net interest income for the quarter YoY.

The brokerage expects gross non-performing assets at around 2.16 percent in Q1FY20 against 2.14 percent in Q4FY19 and 2.17 percent in Q1FY19.

Kotak Bank has maintained its asset quality at 2 percent level (gross non-performing assets).

Key issues to watch out for would be guidance on balance sheet growth, CASA and fee income growth; trend in customer acquisition post the Aadhaar verdict; GNPAs in the MSME segment; and update on the stake reduction.

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