Kotak Mahindra Bank, which has seen a rise of over 7 per cent in a year as compared to the over 9 per cent rise seen in Nifty 50 in the same period, could be a good buy on dips stock amid market volatility. The private sector lender has fallen nearly 19 per cent from its recent high of Rs 2,252 on October 27, 2021. It looks like the stock is taking support above 50-DMA at Rs 1,770 and 20-DMA at Rs 1,782.
Talking about the stock, brokerage firm Anand Rathi said: “Kotak Bank has been under pressure for quite some time, but at this point in time, it has bounced back from its significant support. First the stock turned from this level and we saw a rally towards 2,250. On the weekly chart, there is a Bullish MACE/Bullish cross near the Zero line which looks attractive. Thus, we recommend traders to go long in the stock with a stop loss of 1,725.
The brokerage firm is seeing a 15 per cent rise in Kotak Bank at the current market price of Rs 1,875 for the one-month time frame. And, has set a target price of Rs 2,144.
Q4 Earnings
Earlier this month the private sector lender reported a 65 per cent jump in its standalone profit after tax for the quarter ended March 2022, helped by higher growth in net interest income and healthy asset quality.
The lender had reported a standalone PAT (profit after tax) of Rs 1,682 crore in the year-ago period. For the full financial year 2021-22, PAT increased by 23 per cent to Rs 8,573 crore from Rs 6,965 crore in FY21.
“If you look at our Q4 numbers, our slippage is extremely under control. Our slippage ratio is 1.08 per cent on a yearly basis. Our slippage ratio really now demonstrates that the quality of our credit book is extremely strong as we exit the covid,” Uday Kotak, managing director and CEO of the bank, told reporters.
Consolidated PAT for Q4 FY22 stood at Rs 3,892 crore, up 50 per cent from Rs 2,589 crore in Q4 FY21. For the full FY22, the consolidated PAT increased to Rs 12,089 crore from Rs 9,990 crore in FY21.
Kotak said the consolidated profit is really broad based and not dependent on the bank alone.
He said the bank has a CASA (Current Account Savings Account) ratio of over 60 per cent, which has a significant positive impact on the cost of funds.
“We are entering a new world of interest rates, with very high current and savings account ratios. If 60 percent of my deposit is CASA, that’s a very stable cost of fund base. I have always believed that franchising with low cost and stable liabilities is the core of sustainable banking.”
Should you buy dip?
The stock with a market capitalization of over Rs 3.6 lakh crore remains resilient amid the market volatility. The stock has also given a breakout above the falling trendline channel around Rs 1,800.
Hence, any fall below Rs 1,800 can be used to create a long position in the stock. Experts suggest that above Rs 1,870 will give further momentum to the stock which can take it to Rs 1,950-2,000 in next 2 weeks.
The views and investment suggestions of experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decision.
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