Kotak Bank - A valuation exercise!
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Large Cap Blue Chips
Forum Discription: You would not need to read any note, brokerage reports or wait for FII recommendation to buy these stocks. These are solid companies with established business & are akin to family silver.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=946
Printed Date: 22/Apr/2025 at 2:12am
Topic: Kotak Bank - A valuation exercise!
Posted By: Mr. V
Subject: Kotak Bank - A valuation exercise!
Date Posted: 06/Jun/2007 at 5:06am
|
This discussion is being continued from the thread http://www.theequitydesk.com/forum/forum_posts.asp?TID=614&PID=25815#25815 - Kotak Bank - All in one
Let me get the ball rolling in valuing the various businesses of KMB.
Please note that some of the assumptions made by me could be totally off the mark and I would really appreciate it if TEDdies point it out. Kotak Mahindra Prime Total Advances FY07 4100 cr Total Advances by Bajaj Auto Finance 2650 cr Market Cap of BAF 1402 cr Market Cap of KM Prime 2170 cr KM Prime has recently moved into Personal loans as well and I believe that it is a much better managed company than BAF. Kotak Securities Revenue 834 cr PAT 255 cr Motilal Oswal Revenue 360 cr PAT 65 cr Market cap 1800 cr Based on simple PAT comparisons with Motilal, Kotak Securities should have a market cap of 7200 cr but KS has much better margins than Motilal. I think a better comparison of Kotak Securities + Kotak Prime would be with Indiabulls Financials. Indiabulls Revenue 1244 cr PAT 443 cr Market Cap 11,240 cr KS + KPrime Revenue 1278 cr PAT 312 cr I think its safe to value KS+KPrime at 10,000 cr which is at a slight discount to Indiabulls. Market Cap of Kotak Securities 7830 cr Kotak Mahindra Capital This is the Investment banking business of KMB Revenues 205.17 Profit 67.87 EPS 2.08 MCap @30PE 2036 cr Kotak Mahindra Asset Management AUM 12,100 cr MCap @5% 605 cr International Subsidiaries PAT 35.01 cr EPS 1.07 MCap @30 PE 1050 cr KM Investment + Equity Affiliates – Minority Interest PAT 12.62 cr EPS 0.39 MCap @20 PE 100 cr Kotak Insurance This is currently a loss making division, so I have used the HDFC figures (AV Nuvo thread) for valuations purpose HDFC Premium 1570 cr Valuation 5400 cr Kotak Premium 971 cr MCap @50% discount 1670 cr Kotak Private Equity It is very difficult to value the Private Equity biz because the profits from it are not going to come in the near future. Nevertheless, if one were to look at the funds under mgmt, 1100 cr, and predict that it will be able to triple its investments over the next 4 years then the earnings of the PE division would be 110 cr per year ( 20% of profits ) which means an EPS of Rs 3.4 and @25 PE it would translate into a market cap of 2767 cr. Notes: 1. Kotak plans to launch couple of more PE funds over the next 6-12 months but I haven’t taken that into consideration. 2. Some of the Kotak PE investments have been in Shobha developers, Lemon tree hotels & Pantaloon Home Solutions. Total Market cap of ALL the subsidiaries 18,266 cr Current Market cap of Kotak Mahindra Bank 19,301 cr => Market cap of KM Bank (standalone) 1000 cr PAT of KM Bank (standalone) 141 cr => PE of KM Bank (standalone) 4.45 !!! Apart from the fact that one is getting KM Bank at such a cheap valuation, another hidden trigger the Asset Reconstruction portfolio of about 4000 cr that can generate a huge windfall of profits. |
Replies:
Posted By: deveshkayal
Date Posted: 07/Jun/2007 at 12:08pm
|
Excellent analysis,Victorji.
PE investments can easily triple over four years as far as Lemon tree and Pantaloon Home Solutions are concerned..Does KM has investments in listed entities,if yes which are they. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: vip1
Date Posted: 07/Jun/2007 at 12:44pm
| Very well analysed Mr. V !!!! |
Posted By: basant
Date Posted: 07/Jun/2007 at 1:07pm
|
Excellent analysis but after you have put in the hard work Kotak Bank does not look that attractive a buy. When I say sttratcive I am talking in terms of making multiple gains but this company has grown at more then 50% CAGR for the last 4 years and from the looks of it it does seem set to grow at that rate for the next few years! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mr. V
Date Posted: 07/Jun/2007 at 8:32pm
The only listed entity is Sobha Developers where KM PE got in pre ipo.
Select Investments
1. Sabare International
2. Home Solutions
3. Metahelix Life Sciences
4. Bharat Fritz Werner
5. DRS Logistics (Agrawal movers & packers)
6. IT Park Mumbai
7. Sobha Developers
8. Lemon tree hotels
9. Clover Golf community
|
Posted By: Mr. V
Date Posted: 07/Jun/2007 at 8:50pm
Yes it seems to be fairly valued. Investors who got in last aug-sept when it was quoting in the 200s would reap the benefits.
Are you sure it will be able to maintain a 50% CAGR over the next 4 years ? If it does, then its still a 5 bagger from here.
|
Posted By: basant
Date Posted: 07/Jun/2007 at 8:55pm
|
On a consolidated basis it does look like it could just anlyse the bsuinesses: Insurance
Retail Banking
AMC(MF + PMS)
Private Equity
Brokerage
It does seem that all these industries are high growth so if 50% is a concern 30% plus is very much doable now the pint is if Uday Kotak spins it around then value unlocking in 5 years should get us 50%!
SO the gains should be steady above market and will get a jerk on a spin off!! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mr. V
Date Posted: 08/Jun/2007 at 9:23pm
|
Birla, HSBC, Franklin and SBI have picked up a lot KMB in the month of May.
http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=KMB - http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=KMB
Do they know something that we don't ?
|
Posted By: basant
Date Posted: 08/Jun/2007 at 9:37pm
|
They are not new positions as reported on MC. Still this company is good as you indicated from that valuation exercise. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 06/Sep/2007 at 10:55am
|
Kotak Bank has grown at 60% CAGR for the past 4 years while the entire range of businesses is highly scalable I feel that this growth could dlacken downa bit to a more conservative 40% level.
Take a look at the company's latest quarterly results at:
http://www.kotak.com/Kotak_BankSite/pressroom/pdf/Q1FY08_earnings_update.pdf - http://www.kotak.com/Kotak_BankSite/pressroom/pdf/Q1FY08_earnings_update.pdf http://www.kotak.com/Kotak_GroupSite/investor/Q1FY08_results.htm -
Brokerage income which contributed more then 60% to the total profits in FY07Q1 contributed around 37% to the total profits in Fy08Q1. The reasons for this drop in contribution has been because:
1) The brokerage division actually showed a drop in profitability
2) Maybe the spate of aggressive marketing by Reliance Money has affected the profitability of this division.
Though Kotak Bank is a robust business model led by an able mangement
the slackening growth in the brokerage division could bring down the overall growth of the company to around 40%.
We need to watch the results fo a couple of quarters though.Meanwhile Kotak bank remains a classic play on the Indian financial sector which growing at more then 40%. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mr. V
Date Posted: 07/Sep/2007 at 8:16pm
|
The Brokerage business is getting crowded and it will be very difficult for Kotak Securities to maintain a decent pace.
Future gains in KTB will come from Retail, Investment banking and its international business.
The hidden value that is probably not factored into the valuations are in the Private Equity and Asset reconstruction business.
|
Posted By: deveshkayal
Date Posted: 07/Sep/2007 at 10:26am
|
The hidden value that is probably not factored into the valuations are in the Private Equity and Asset reconstruction business.
---------------------------------------------------------------
It seems to me ARC is a great business with every other player jumping in the business. Arcil, where ICICI,SBI,IDBI holds 24.5% stake each dominates the space currently. Rel Cap which holds 49% in its proposed ARC along with Soros and Blue Ridge. ARCs buy out the NPA's of bank and then turn them around. ARCs is a Rs 2,00,000 crores market. StanChart, JM Financial are other players who have apllied for license for venturing into the same. My question how should we value ARC's?....P/BV???
How ARC's work click http://www.arcil.co.in/ARCIL/HOME/ASP/ARCIL_News_brief.asp?MenuID=5&News_ID=58 - here ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: smartcat
Date Posted: 12/Sep/2007 at 12:29pm
Is it fair to look at Kotak Bank only on EPS/earnings growth basis? Unlike HDFC Bank, Kotak has a fast growing insurance business that doesn't contribute to earnings yet.
|
Posted By: basant
Date Posted: 12/Sep/2007 at 12:46pm
|
Yes, I had that in mind but after the Bajaj fiasco I have become very apprehensive about the insurance business - while the busienss should do exceedingly well we are not sure which of these would have issed call options to the foreign partners. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: deveshkayal
Date Posted: 12/Sep/2007 at 12:50pm
|
Can anyone compare the insurance business of Rel Cap v/s Kotak ??? ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: basant
Date Posted: 12/Sep/2007 at 12:55pm
|
RCap is ahead because ina few quarters their new business is as good as Kotak but Rcap selss mostly ULIPs also the advantage is that they are 100% owed so no problem on calls etc but the biggest problem is risk management that we can know only after a few years or after looking at the pedigree of the guys managing the business. In US insurance companies went down 90% because they were aggressive in writing policies. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: vip1
Date Posted: 13/Sep/2007 at 11:17am
|
Kotak Bank is planning to have 200 Branches by June 2008, present-132.Adding 25% in Rural areas .
Adding customers @35000 per month target 50000 per month .
|
Posted By: deveshkayal
Date Posted: 13/Sep/2007 at 11:53am
|
Investment bankers to the Power Grid IPO has waived the fees. A source close to the deal said: "The banks are waiving the fees because of league table credits and possibly because of a better long-term relationship with the Government. There will be basic expenses but no fees as such."
I forgot the source. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: kg
Date Posted: 06/Oct/2007 at 12:25pm
|
May not be relevant but since i noticed thot it may b interesting to some ppl ...sebi site shows insiders selling kotak bank in the month ended sept ..and the list is huge for icici bank sellers .... ------------- Lets rock |
Posted By: basant
Date Posted: 06/Oct/2007 at 8:12am
|
Please post that link. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: reetesh
Date Posted: 06/Oct/2007 at 11:34am
|
These are ESOP which people are selleing from Rs.200! ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: kg
Date Posted: 07/Oct/2007 at 1:08pm
|
basantji
http://www.bseindia.com/Insidetrade.asp#scrip_search - http://www.bseindia.com/Insidetrade.asp#scrip_search
alongwith the another link for Disclosure Under Reg 7(1), 7(1A) and 7(3) of SEBI SAST regulation 1997 is also given below ..
http://bseindia.com/Sast.asp - http://bseindia.com/Sast.asp Yes Reeteshji this will be the esop holders but i was checking with a friend in ICICI bank and he told me that the window is closed now for results are in the offing and so these guys might be selling out before the window gets closed for sq . ------------- Lets rock |
Posted By: snehaldani
Date Posted: 07/Oct/2007 at 1:44pm
|
We should not read too much in sales by insiders of ESOP shares. It is normal and natural. They count the values as part of their remuneration and use the funds for bigger houses/cars/holidays etc.
Purchases by insiders at current prices warrant more attention as they signify the values perceived by them at current prices.
The only rider is : A cunning management or operator can camouflage those purchases which may be circular transaction / benami holding. ------------- Snehal P.Dani |
Posted By: CHINKI
Date Posted: 11/May/2008 at 12:49pm
|
I had seen this link quite some time back and wanted to do with the latest figures since III qtr. With the FY08 results are out, I thought this is the best time to do.
I have just copied/followed whatever Mr. V had done with the latest figures doing tinkering here & there. With the present downtrend in the market, I have taken lesser multiples with comparision to what Mr. V had taken. Please note I have taken 1$ = Rs.41/- & total no. of shares = 34.4673 Cr. Anything found not correct or exaggerating, let us debate. Kotak Mahindra Prime RS. IN CR. BAF KMP TOTAL INCOME 400 740 PBT 52.55 155 PAT 36.55 101 MARKET CAP 1101 2000 This has been compared with Bajaj Auto Finance (BAF). Si nce total advances given by BAF was not available, I am comparing with their Total Income/PBT/PAT. Eventhough PBT & PAT are better w.r.t total income, I have still taken Market Cap to be Rs.2000 Cr. Kotak Securities : Revenue - 1330 cr : PAT - 409 cr Since India Bull Securities Limited has been demerged into a separate company, I am taking its figures for comparison: Revenue - 621 cr : PAT - 252 cr : Market cap - 2841 cr It is safe to take Market Cap of Kotak Securities at 4500 cr Kotak Mahindra Capital This is the Investment banking business of KMB. Revenues - 285.6 Cr : Profit - 115.3 Cr : EPS - 3.35 MCap @20PE 2309 cr (Mr. V had taken 30PE) Kotak Mahindra Asset Management AUM US$8.9 bn = 36490cr Life Insurance = 1691Cr PMS = 3400Cr Intl. Assets Mgmt = 8610Cr (US$2.1bn) Alt. Assets Mgmt = 5740Cr (US$1.4bn) MF = 17049Cr. But this is not equal to Rs.16100 Cr as given by them. Still, I will consider the lesser of that which is Rs.16,100 Cr. MCap @6% 966 cr INTERNATIONAL SUBSIDIARIES PAT - 64.5 Cr : EPS - 1.87 MCap @20 PE 1611 Cr (Mr. V had taken 30PE) KM INVESTMENT + EQUITY AFFILIATES – MINORITY INTEREST PAT - 40.07 cr (42.6+13.81-16.34) : EPS - 1.16 MCap @15 PE 600 cr ((Mr. V had taken 20PE) KOTAK LIFE This is currently a loss making division. I have used Devesh’s calculation of assessing value of Life Insurance in Rel. Capital which is as given below: Third largest player by FY11. New Business Premium of Rs.75 bn in FY10, 17% margins, multiple of 20 with RelCap's stake being 95% = 984/share Kotak Premium as on FY08 - 1691 Cr incl. First Year Regular Premium (Rs.1045.6 Cr), Single Premium (Rs.61 Cr) & Renewable Premium (Rs.584.5Cr). So New Business Premium would be Rs.1106.6 Cr. (1045.6+61) At 10% margins & 15PE (Devesh has taken 17% margins and 20PE), it works out to 1228 Cr M.Cap.for 74% stake which is very less compared to what Mr. V had taken Rs.1670 Cr. Market cap for Rs.971 Cr. Premium. Going by Mr. V ‘s logic, for Rs.1691 Cr premium, Market Cap works out to Rs.2908 Cr. If we consider entire premium of Rs.1691 Cr.,then at 10% margins and 15PE, Market Cap works out to Rs.2537 Cr. Since this is lesser value, I will take Rs.2537 Cr. Market cap for Insurance business. KOTAK PRIVATE EQUITY This is what Mr. V had written about PE amount at that time: It is very difficult to value the Private Equity biz because the profits from it are not going to come in the near future. Nevertheless, if one were to look at the funds under mgmt, 1100 cr, and predict that it will be able to triple its investments over the next 4 years then the earnings of the PE division would be 110 cr per year ( 20% of profits ) which means an EPS of Rs 3.4 and @25 PE it would translate into a market cap of 2767 cr. If an initial investments had to triple in four years, then it has to give CAGR of 41.5% over those years. Since at the end of 4 years the amount would be Rs.4,400 Crores, profit would be Rs.3,300 crores. So profit/year would be Rs.825 crores. So I don’t know how he got 110 crores profit. Currently, funds under management : Rs.5740 cr. (US$1.4bn) Assuming 15% profit under the present market condition, profit = 861 Cr. EPS = Rs. 24.98/- Taking PE @ 15 (Mr. V had taken 25PE), it would give market cap of Rs.12915Cr. Total Market cap of ALL the subsidiaries 27,438 cr Current Market cap of Kotak Mahindra Bank 25,407 cr Is anything I have missed?? Have I given any high PE or something?? I have not yet accounted Bank, Trusteeship Services, Forex Brokerage and Asset Reconstruction Company. As on 18th February 2008, when sensex was at 18,048 and Kotak price was Rs.923/-, Motilal Oswal had given recommendation for buy giving target price of Rs.1,301/- which works out to Market Cap of Rs.44,842 Crores. Citi in their 11th March 2008 report have maintained target as Rs.1,025/- valuing Insurance at Rs.115/-per share and Rs.110/- to AMC business (6% of MF and 9% for PMS and Alternative Assets). Their EPS estimation for 2008 was Rs.24/- while they have done Rs.29.2/-. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: deveshkayal
Date Posted: 11/May/2008 at 1:40pm
Market is forward looking and not backward, so you have to estimate future earnings FY09, FY10. Nonetheless, Good efforts 
Small Correction in Valuation:
Private Equity will be valued at 15% of AUM
Life Insurance: 19% margins in case of Kotak and 18 multiple.
Brokerages: 18x forward multiple
Having said that, who knows what valuation is correct  ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: basant
Date Posted: 11/May/2008 at 1:52pm
In bearish phases we look at trailing EPS and in bullish ones we look at 2013 ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: CHINKI
Date Posted: 11/May/2008 at 5:29pm
True Devesh. I was only trying to find out the present value of KMB. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: omshivaya
Date Posted: 11/May/2008 at 7:37pm
Yuppity Puppity Yups!!
 Kulman sa'ab, one more for the Basantology series. Note down kara jaye!  ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: Mr. V
Date Posted: 12/May/2008 at 3:16am
|
Thanks Chinki for updating the valuations with FY08 numbers.
I think for Valuation purposes, its best to keep it simple and value Kotak's brokerage franchise at a PE of 15x and that would give it a Mcap ~ 6000 cr
Indiabulls securities is presently being valued at a PE multiple of ~11 but other players like Motilal, India Infoline etc seem to be commanding much higher valuations.
Tripling of the corpus equates to an absolute return of 200%, that would mean 1100 cr becomes 3300 cr
Kotak's share of the profit is 20% (Actually its lower because of hurdle rates and all but for simplicity let's assume 20% of total profits).
This works out to 440 cr ( 20% * (3300 - 1100) )
Annualizing the profit over 4 years means 110 cr per year.
Devesh has mentioned that Private Equity should be valued at 15% of AUM that would translate to a Market Cap of 15%* 5740 = 861 cr Valueing Private Equity businesses can be very tricky. I personally feel that we can't use the same valuation techniques as traditional asset managements businesses like equity MFs, Bond houses because the PE player gets to keep a significant chunk of the profits as well as charge a 2% management fee that more or less goes to the bottomline.
I would take 2% mgmt fees + 8% annual returns on the AUM as Net Profit for the Private Equity biz and then value it at say 15 PE.
That would mean a market cap of 8100 cr.
|
Posted By: deveshkayal
Date Posted: 13/May/2008 at 7:27pm
|
Infact, Kotak Investment Banking MD Falguni Nayyar herself has mentioned that PE is valued at 15-20% of AUM !!! ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: deveshkayal
Date Posted: 13/May/2008 at 7:59pm
|
http://economictimes.indiatimes.com/Motilal_Picks_Kotak_Bank_Asian_Paints_Ashok_Leyland/articleshow/3036225.cms - Motilal Oswal has maintained 'buy' on Kotak Mahindra Bank for a target price of Rs 985 ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: basant
Date Posted: 13/May/2008 at 8:18pm
|
Most is slowly adjusting to the reality - falling prices with falling targets. So much has changed in the past 16 weeks! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mr. V
Date Posted: 13/May/2008 at 8:34pm
|
Hey Devesh, If you are referring to http://www.livemint.com/2008/01/08001740/Betting-on-high-future-growth.html - this article then it applies to firms that provide advisory services to VC or PE funds. The PE/VC funds will either make big profits or lose capital based on whether their bets work out or not.
The 15-20% of AUM valuation is essentially valuing only the managament fees of 2% at 10 PE. That's the lowest possible valuation for the fund.
While its prudent to have a very conservative valuation approach but I feel its also important to keep the magnitude of the upside in mind, especially if one is trying to get a handle on the long term potential.
|
Posted By: deveshkayal
Date Posted: 13/May/2008 at 10:08am
|
What is the difference between Future Capital's Indivision and Kotak PE ? Both raises the fund from outsiders and invest it on their behalf and take away 2/20 as management fees and profit. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: Mr. V
Date Posted: 14/May/2008 at 9:39pm
|
If its 2/20 then the 15% of AUM valuation factors in only the 2% guaranteed mgmt fees. Its an ultra conservative approach.
|
Posted By: CHINKI
Date Posted: 14/May/2008 at 9:56pm
I think both are same. Because after collecting the money, both are investing in companies which gives high returns. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: pramod
Date Posted: 17/Dec/2008 at 1:53pm
|
Private sector Kotak Mahindra Bank has made a provisioning of Rs 86 crore to cover the mark-to-market (MTM) losses of its clients on account of forex derivative transactions. Around 45 clients of the bank which have taken exposure to forex derivatives have incurred MTM losses of Rs 612 crore on account of forex transactions as on May 8, 2008. “With regard to exposure to forex derivatives, the bank has no exposure to SME clients,” vice-chairman and MD Uday Kotak said. _____________________________________________________________ ------------- |
Posted By: kumardiwesh
Date Posted: 22/Jan/2009 at 5:42pm
|
Kotak Mah Bank Q3 cons net down 64% at Rs 131 cr
Kotak Mahindra Bank has announced its third quarter numbers. Its Q3 consolidated net profit went down by 64% at Rs 131 crore versus Rs 363.8 crore. The bank's net interest income, NII was up by 20.9% at Rs 588 crore versus Rs 486.3 crore. Its loss on sale of investments stood at Rs 165 crore versus profit of Rs 308 crore. ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: basant
Date Posted: 22/Jan/2009 at 7:19pm
|
Maybe CHinki and Snehalji can add to this but I heard the interview on TV and the CFo said a very important thing and he indicated that all NPA does not make a zero recovery since the loans are against security and hence out of the provisions a reasonable percentage is recoverable though with a lag.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kumardiwesh
Date Posted: 22/Jan/2009 at 7:57pm
|
What is the percentage of NPA for KOTAK? ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: kumardiwesh
Date Posted: 22/Jan/2009 at 1:06am
|
Kotak Mahindra Bank: Key Takeaways
* Consolidated total income at Rs 1685 crore Vs Rs 1850 crore (QoQ) and Vs Rs 2483 crore (YoY). * Cons Capital Adequacy Ratio at around 20% ( and at 21% incl current years' profits) * Cons advances at Rs 23,865 crore Vs Rs 21,420 crore (YoY), Cons NIM at 6% Vs 5.7% (YoY). Cons NPA at 1.01%. * Cons book value per share at Rs 183/sh. * Standalone PAT at Rs 71 crore Vs Rs 48 crore (QoQ), standalone NII at Rs 383 crore Vs Rs 347 crore (YoY). Have 209 branches and 375 ATMs, as on December 2008. * Deposits as on December 31, 2008 were Rs 14,841 crore Vs Rs 14,279 crore (YoY). CASA deposits comprised 26% of total deposits. Total number of deposit accounts over 10 lakhs. * Standalone CAR at 17% Vs 18.4% (YoY). Tier-1 ratio at 13.8%. * Bank to use capital effeciently in the future. Bank will continue to be conservative on credit. * Taking calibrated exposure on prop. side. * Market share lost in Kotak Securities, Rs 39.2 crore taken off from topline. * Bank not carrying significant portfolio in aquisitions, continue to follow stringent RBI guidelines. * Standard provision stands at 2%. * Asset Under Management (AUM) stands at Rs 14,000 crore. ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: basant
Date Posted: 22/Jan/2009 at 4:53am
|
Just if they can focus on keeping the RoE at near about 20% everything else is follow. At the present market cap Kotak Bank looks cheap but it is more of arelative question these days. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mr. V
Date Posted: 22/Jan/2009 at 9:53am
| Everything looks cheap relative to their prospectives during the bull period |
Posted By: master
Date Posted: 23/Jan/2009 at 8:45pm
Gross NPA for 9 months ended Dec 31, 2008 at 3.68% (up from 2.48% same period previous year). In absolute terms, Rs 891 crore.
Net NPA for 9 months ended Dec 31, 2008 at 2.35% (up from 1.55% same period previous year). In absolute terms, Rs 561 crore.
ROA has fallen to 1.09% from 2.18%.
I believe they are going more conservative on credit hereon. Issue is whether all negatives are now factored in the price?
------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: kumardiwesh
Date Posted: 23/Jan/2009 at 8:58pm
|
Their NPAs are very high.
What is their credit/deposit ratio? Their growth might be hampered if NPAs are high and/or if C/D is high? ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: master
Date Posted: 23/Jan/2009 at 9:11pm
|
NPA level is not the only issue.
There is another qualification -
the Group has changed its accounting policy in relation to structured liabilities. The derivative embedded in the structured liabilities is separately valued at each reporting date. The net mark to mark loss on capital market derivatives are provided for and the net mark to market gains are ignored keeping in view the principle of prudence.
Had the previous accounting policy been followed the profit after tax for the quarter ended 31st December, 2008 would have been higher by Rs. 1,176.83 lakhs net and for the nine months ended 31st December, 2008 lower by Rs. 1,133.25 lakhs net.
------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: kanagala
Date Posted: 23/Jan/2009 at 9:26pm
|
Negative aricle on KMB got it from a blog. I am not familiar with numbers. Can some one verify them? Kotak Mahindra Bank-The Mirror Cracked From Side To Side The long held halo of invincibility built around private sector banks and the resultant high valuations that they have been fetching so far, should get settled once and for all after looking up the Q3 numbers of Kotak Mahindra Bank. Not only is the bank performance an
unmitigated disaster, it holds evil portents for the future. The stock
should trade between Rs 125 to Rs 150 at 7 times FY09e EPS and 0.75
times price to estimated book value for March 2009. Dame
Agatha Christie might in some unique way have been thinking of Kotak
Bank when she wrote her memorable novel, "The Mirror Cracked From Side
To Side" way back in 1962. Now let us look at the numbers presented by Kotak Bank:
-Total Assets managed/Advised by the Group as on December 31, 2008 were
Rs 320 bn. Compare this to managed assets of Rs 372 bn in September
2008 and Rs 460 bn in December 2007, and the contraction of operational
size becomes visible. A contraction of Rs 140 bn yoy. -Standalone PAT of Kotak Bank is Rs 71 crore for Q3 FY08, down 30 per cent qoq over December 08 PAT of Rs 101 crore.
-For the fourth consecutive quarter Kotak Bank has reported Negative
Revenues from Treasury-Insurance activities. The Negative Revenues
being Rs 4798 mn for the 9 months to December 2008, and Rs 1658 mn and
Rs 585 mn respectively for Q308, and Q208. -Retail
liabilities and branch banking continue to bleed Kotak Bank reporting
PBT loss of Rs 1847 mn (Rs 1356 mn) for the nine months to December
2008. -Losses on Life Insurance on the PBT level for the
nine months to December 2008 are Rs 222 mn (Rs 729 mn), and losses at
the PBT level on Credit Cards are a whopping Rs 488 mn for the period
to December 2008. Incidentally credit cards were launched only in 2008,
so this loss is a first of its kind for Kotak Bank. -Net NPAs have tripled to 1 per cent as compared to December 2007 and March 2008 Net NPAs of 0.3 per cent.
-As a consequence of the above, Consolidated profits for Kotak Bank
have dropped down to Rs 4417 mn in the nine months to December 2008,
against comparable yoy figures of Rs 7511 mn, a fall of 42 per cent. -Consolidated nine month EPS works out to Rs 12.7 against yoy figure of Rs 22.30 again a fall of 44 per cent.
-Book Value per share of Kotak Bank is Rs 183, a mere increase of Rs 4
per share since September 2008 and a miserly increase of 8 per cent
over March 2008 book value of Rs 168 per share.
-Considering the de-growth of the Bank's Asset size and the none too
rosy economic scenario unfolding ahead of us, Kotak Bank does not
deserve a PE of 17 on forecast FY09 EPS of Rs 16. Further it does not
justify a premium multiple to December 2008 Book Value of Rs 183 per
share. -The stock should trade at single digit PE
multiples on the lower side say 7-8, and a Price to Book exceeding no
more than 0.75 times. ------------- While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior. |
Posted By: basant
Date Posted: 23/Jan/2009 at 9:49pm
|
Companies like Kotak Bank, R Cap, Indiainfoline, Geojit, Edelweiss are bull market stocks in bearish conditions they get a double whammy not only does the PE decline the EPS also moves down hence lending a double blow. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: master
Date Posted: 23/Jan/2009 at 10:04pm
|
Specific to kotak, there is an important shift in mix of "other income" as compared to Dec07 period.
Premium on insurance business constitutes as high as 63% of other income (as against 33% for Dec07 period) whereas commission & brokerage income is down to 36% (as against 50% for Dec07 period). Insurance premium may be more sustainable probably.
------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: kulman
Date Posted: 23/Jan/2009 at 10:13pm
How much was contributed by (t)Ulip? (t)Ulips were marketed aggressively by misleading investors. I guess that not many people might renew. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: kumardiwesh
Date Posted: 23/Jan/2009 at 11:31pm
You mean to say the element of cyclicality in these businesses is quite high. Which of these businesses would be the best buy at present? R Cap? ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: basant
Date Posted: 23/Jan/2009 at 6:35am
|
I would not buy any of these at any price. Reason being I cannot know whether the stock would become cheap (EPS would growth is unpredictable).
Even when these companies were very hot about ayear and ahalf back I was not attracted to them for this very reason. I like buying companies who would get cheaper every year (the degree of growth could differ though).
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kvinodhan
Date Posted: 23/Jan/2009 at 6:43am
| Just to get my understanding right....you wouldn't might looking into companies even though is PE is getting low if EPS remains intact..... |
Posted By: basant
Date Posted: 23/Jan/2009 at 6:58am
|
See most of these companies are leveraged to a bull market and unless we get aroaring bull in place how can companies with brokerages, Asset management busineses etc do well and even if they do markets wil never rate them with a higher PE> Hence I would not buy them but if you are holding 20 stocks you can add a couple of these and that too when the stock price just stays flat for a few months and goes nowhere.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kanagala
Date Posted: 23/Jan/2009 at 8:57am
How many of you believe in Rcap numbers? KMB looks like a good bet among them. ------------- While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior. |
Posted By: Circuit
Date Posted: 23/Jan/2009 at 9:32am
|
I agree with Basant that the stocks like - JP Associates, RCap, Kotak are Bull mkt favorite stocks (Rockets) and not to be even looked at during prolonged bear phase like the one we are sailing in.....
|
Posted By: kumardiwesh
Date Posted: 27/Jan/2009 at 1:57am
Would it make sense to buy these companies just like we buy cyclicals? That is to buy them after a few quarters of negative EPS growth? ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: basant
Date Posted: 27/Jan/2009 at 7:10am
|
That is the oly method to gain from such companies but one has to hold them - till they go up!!!
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: s_praharaj
Date Posted: 01/Feb/2009 at 7:36pm
|
I am not hearing good things about Kotak Bank these days.
Its prudent not to Buy the stock now. ------------- Shashi Praharaj |
Posted By: bub100
Date Posted: 02/Feb/2009 at 3:55pm
|
looking for equity partner? please send more details.
thanks ------------- gs |