Kotak Bank has emerged as one of the most valuable private banks in India along with HDFC Bank and ICICI Bank. It has not only maintained a very strong CASA growth but it has also kept the asset quality under a tight leash not allowing bad loans to pile up through a very conservative approach to managing asset quality.

Kotak Mahindra Bank fourth quarter results

For the March 2019 quarter, Kotak Bank reported a 25% growth in net profits to Rs.1408 crore. The net interest income (NII) of the bank increased by 18% to Rs.3048 crore n the March quarter. Gross NPAS were marginally up from 2.07% to 2.14% n the latest quarter with net NPAs marginally up at 0.75%. This is largely indicative of asset quality under control and that is the kind of control the bank has maintained all along over its asset quality. The bank also reported a very healthy net interest margin (NIM) at 4.48%, which places the bank among the top ranked banks in terms of NIMs. The loan growth in the quarter has been 21% while the CASA ratio was also higher at 53% of total deposits.

Should you look to buy more of Kotak Bank at current prices?

The stock trades at a price of Rs.1385 and the P/E at the current levels is around 54, which is in line for most of the higher profitable private banks in India. Also, if it can sustain growth at 25% in net profit, then sustaining a higher P/E should not really be a major challenge for the bank. The stock has typically been a “Buy on dips” stock and has rarely disappointed the investors in the medium to long run. The idea for the investor is that they can look at accumulating the stock in a phased manner than jumping into the stock in one shot.