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Stock Pick: Analysts advise purchasing this bank stock for a potential monthly return of 15%.

Amid market volatility, Kotak Mahindra Bank, which has increased by more than 7% in the past year as opposed to the Nifty50's increase of over 9% during the same period, may be a potential buy-on dips stock. From its most recent high of Rs 2,252 set on October 27, 2021, the private sector lender has decreased by around 19%. The 50-DMA at Rs 1,770 and the 20-DMA at Rs 1,782 appear to be providing support for the stock.

Anand Rathi, a brokerage business, commented on the stock by saying: "Kotak Bank has been under pressure for a while, but at this point, it has reversed from its important support. When the stock previously flipped from this point, we witnessed a rise towards 2,250. On the weekly chart, there is a profitable bullish MACE/bullish cross close to the zero line. As a result, we suggest that investors buy the stock and set a stop loss at 1,725.

At the present market price of Rs 1,875, the brokerage company forecasts a 15% gain for Kotak Bank over one month. also has Rs 2,144 as its target price.

Q4 Earnings

The private sector lender announced earlier this month that stronger growth in net interest income and strong asset quality helped it increase its standalone profit after tax by 65% to Rs 2,767 crore for the quarter ended March 2022.

In the prior year's period, the lender had posted a standalone PAT (Profit After Tax) of Rs 1,682 crore. PAT increased by 23% to Rs 8,573 crore for the full fiscal year 2021–2022 from Rs 6,965 crore in FY21.

"Our Q4 data show that slippages have been tightly under control. Our slippage ratio is 1.08 percent when annualized. As we exit Covid, our slippage ratio shows that the strength of our credit book is very high, the bank's managing director and CEO Uday Kotak told reporters.

Consolidated PAT for the fourth quarter of FY22 was Rs 3,892 crore, up 50% from Rs 2,589 crore in the previous quarter. Consolidated PAT grew to Rs 12,089 crore for the entirety of FY22 from Rs 9,990 crore in FY21.

According to Kotak, the consolidated earnings are diverse and not excessively reliant on the bank.

He said that the bank's CASA (Current Account Savings Account) percentage of 60% or more significantly lowers the cost of funds.

"With a very high current and savings account ratio, we are entering a new era of rising interest rates. It is a highly consistent cost of fund base if CASA makes up 60% of my deposit. I have always thought that the foundation of sustainable banking is a low-cost, reliable liability franchise," he stated.

Should You Buy the Dip?

The stock, which has a market capitalization of about Rs 3.6 lakh crore, has held up well during market turbulence. Around Rs 1,800, the stock also made a breach above the channel formed by a falling trendline.

Any drops toward Rs 1,800 can therefore be used to open long bets in the stock. A closing over Rs. 1,870 will give the stock more traction and might push it toward Rs. 1,950 or 2,000 in the upcoming two weeks, according to experts.

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