Kotak Mahindra Bank, which has seen a rise of more than 7 percent in a year, compared to a rise of more than 9 percent in Nifty50 over the same period, could be a good buy for stocks that are in dips amid market volatility. The private sector lender is down about 19 percent from its recent high of Rs 2,252 on October 27, 2021. The stock appears to be gaining support above 50-DMA at Rs 1,770 and 20-DMA at Rs 1,782.
Speaking of the stock, brokerage firm Anand Rathi said: “Kotak Bank has been under pressure for quite some time, but at the moment it has reversed its crucial support. Previously, the stock reversed 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 lucrative, so we advise traders to go long in the stock with a stop loss of 1.725.”
The brokerage firm is seeing a 15 percent increase on Kotak Bank at the current market price of Rs 1,875, for a period of one month. And has set a target price of Rs 2,144.
Q4 profit
The private sector lender reported a 65 percent jump in its stand-alone after-tax profit from Rs 2,767 crore in the quarter ended March 2022, helped by higher net interest income growth and healthy asset quality earlier this month. .
The lender had reported a standalone PAT (Profit After Tax) of Rs 1,682 crore in the period from a year ago. For the full fiscal year 2021-22, the PAT rose 23 percent to Rs 8,573 crore from Rs 6,965 crore in FY21.
“If you look at our Q4 numbers, our slippages have been extremely under control. On an annualized basis, our slippage ratio is 1.08 percent. Our slippage ratio now actually shows that the quality of our credit book is extremely robust as we exit Covid ,” the bank’s general manager and CEO Uday Kotak told reporters.
The consolidated PAT for Q4 FY22 was Rs 3,892 crore, up 50 percent from Rs 2,589 crore in the fourth quarter of FY21. For the whole of FY22, the consolidated PAT rose to Rs 12,089 crore from Rs 9,990 crore in FY21.
Kotak said consolidated earnings are really broad-based and not disproportionately dependent on the bank alone.
He said the bank has a CASA (Current Account Savings Account) ratio of more than 60 percent, which has a significant positive effect on the cost of funds.
“We are entering the new world of rising interest rates, with a very high current and savings account ratio. If 60 percent of my deposit is CASA, that is a very stable basis for the cost of the fund. I have always believed that cheap and stable liability franchise is the core of sustainable banking,” he said.
Should you buy the dip?
The stock, which has a market cap of over Rs 3.6 lakh crore, has remained resilient despite the volatility of the market. The stock has also broken out above the descending trendline channel around Rs 1,800.
Therefore, any dips towards Rs 1,800 can be used to create long positions in the stock. A close above Rs 1,870 will give the stock further momentum, allowing it to climb towards Rs 1,950-2,000 over the next 2 weeks, experts suggest.
The expert opinions and investment tips in this News18.com report are their own and not the website’s or its management. Users are advised to contact certified experts before making any investment decisions.
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