Dalal Street Hot Chips Buy Calls – 2nd – 20th May
Kotak Mahindra Bank
BSE Code: 500247
Volume: 147972
CMP: Rs 744.2
The stock has emerged the frontrunner in the banking space led by the strong growth in lending business backed by strong loan growth and impressive non-interest income growth. The bank reported significant improvement in asset quality as Gross NPA declining by 17 per cent on a Q-o-Q basis and Net NPA declining by 23 per cent on Q-o-Q basis in absolute terms, with the help of higher write-offs and reduction in gross slippages in the quarter. Contribution from the financing business (Banking and Auto Finance) increased to approx. 60 per cent for FY10 (70 per cent in Q4FY10) compared with 40 per cent in FY08. Its performance is likely to be better going forward and with the CASA ratio improving to 31 per cent the bank is definitely going to be benefited after the implementation of the base rate. One can look at the stock with a short-to-medium term perspective.
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