Kotak Mahindra Bank reported its Q4 FY24 earnings with a mixed bag of performance indicators. While the private lender saw improvements in asset quality and a rise in net interest income (NII), it reported a 14% decline in net profit year-on-year. The net profit for the March 2024 quarter came in at ₹3,551.7 crore, compared to ₹4,133.3 crore in Q4 FY23, primarily impacted by higher provisions and operating expenses.
The bank’s NII stood at ₹7,283.6 crore, marking a 4% increase over the ₹6,909.4 crore reported in the same quarter last year. Operational metrics remained steady with a net profit margin of 29.3% and an operating margin of 24.4%, reflecting the bank’s ability to maintain core profitability despite near-term headwinds.
The gross non-performing assets (GNPA) of Kotak Mahindra Bank declined to 1.42% from 1.50% in the previous quarter, while net NPA dropped sharply to 0.31% from 0.41%. In absolute terms, gross NPA decreased from ₹6,266.25 crore to ₹6,133.85 crore, and net NPA fell from ₹1,680.98 crore to ₹1,343.44 crore, highlighting better recoveries and prudent lending practices.
Also Read: SBI Q4 Results: Asset Quality Improves; Provisions Surge Amid Stable Slippages
Valuation-wise, the stock trades at a price-to-earnings (P/E) ratio of 22.6 and a price-to-book value (P/B) of 2.76—significantly above the industry averages of 11.3 and 1.20, respectively. With a book value of ₹792 and a current market price of ₹2,185, the bank’s premium valuation reflects investor confidence in its long-term growth strategy. The return on equity (ROE) for Kotak Mahindra Bank stands at 13.4%, and the return on assets (ROA) of the bank is healthy at 2.34%. Despite a low dividend yield of 0.09%, Kotak maintains a strong capital position with zero pledged promoter holding and ₹15,768 crore in free cash flow.
Over the past three years, the bank has delivered a compounded profit growth of 16.8% and a sales CAGR of 24.8%, showing consistent expansion. However, the net profit decline this quarter may lead to cautious sentiment in the short term.
The shareholding pattern reveals that foreign institutional investors (FIIs) currently hold 32.65%, down from over 40% two years ago. Domestic institutional investors (DIIs) have increased their stake to 29.13%, while promoter holding remains stable at 25.88%.
Analyst sentiment remains moderately positive. Out of 39 analysts covering the stock, 54% have a ‘Buy’ rating, 21% recommend ‘Outperform’, and 15% suggest ‘Hold’. Around 8% have rated the stock as ‘Underperform’ and 3% as ‘Sell’, suggesting a cautious but optimistic view amid earnings pressure.
Also Read: Godrej Properties Reports 19% Decline in Q4 Profit; Revenue Jumps 49% YoY
Despite the decline in net profit, Kotak Mahindra Bank’s improving asset quality, strong financial ratios, and stable institutional support indicate that the bank remains fundamentally sound with long-term growth potential.
Disclaimer
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