Kotak Mahindra Bank Limited the flagship company of the Kotak Group is one amongst the fastest growing banks and most admired financial institutions in India. It offers services such as transaction banking, operates lending verticals, manages IPOs also provides working capital loans. The principal business activities of the Bank include consumer banking, commercial banking, corporate banking, treasury, and other financial services.

Figure 1 Diversified and integrated financial services (Source : Company Presentation)

The Bank along with its subsidiaries offers a comprehensive range of financial products and services to its customers which includes Corporate Loans, Trade Finance, Business Banking, Commercial Real Estate, Forex/ Treasury, Cash Management Custody Business and Off-shore Lending under Wholesale Banking. It offers Agriculture Finance, Tractor Finance, Commercial Vehicles finance, Construction Equipment finance, Microfinance and Gold Loans under Commercial Banking. Under Consumer banking segment company offers Branch Banking, Kotak811, Home loans & LAP, Personal Loans, Consumer Finance, Credit Cards, Priority Banking, Small Business Loans, Working Capital, NRI Banking, Rural Housing & Business Loans, Forex Cards, FASTag and Loan against Shares. Company also offers other financial services such as Private Banking, Car and 2W Loans, Mutual Funds, Alternate Assets, Off-shore Funds, Life Insurance, General Insurance, Investment Banking / DCM, Broking, Infra Debt Finance and Asset Reconstruction to its customers.

Company’s depository subsidiary, Kotak Securities has 11.4% market share as per Q4FY24 and it offers services which allows the customers to hold equity shares, government securities, bonds, and other securities in electronic or Demat forms. Company recently launched Neo Mutual Fund platform which simplifies user journeys for greater accessibility and convenience. For Enhanced order journey and faster processing of IPO applications it launched IPO module and Quick trading feature with Charts, Option Chain, Positions, Orders and P&L – all on one screen company launched InstaTrade features. It has also launched Trade free Pro Plan which offering one of the best pricing plans in the industry for MTF (Margin Trading Facility). With this enhanced trading experience, Kotak Securities' NEO platform has now positioned the firm for strong growth.

On international front the Bank addresses the entire spectrum of financial needs of Non-Resident Indians (NRIs) through their tie-up with the Overseas Indian Facilitation Centre (OIFC) as a strategic partner which gives them a platform to share their comprehensive range of banking & investment products and services for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).  The bank also has overseas subsidiaries with offices in Mauritius, London, Dubai, Singapore, San Francisco & New York which are mainly engaged in investment advisory and investment management of funds, equity & debt trading, management of GDR/ FCCB issuances, broker & broker dealer activities and investments.

Company’s Kotak Mahindra AMC & Trustee Co. has overall 3,84,007 Cr. worth of Average Assets Under Management and 2,38,018 Cr. worth of Average Assets Under Management as Equity. It has GROUP AUM of Rs. 5,60,140 Cr. along with CUSTOMER ASSETS of Rs. 4,23,324 Cr. and Deposits of Rs. 4,48,954 Cr. Company gained Equity AAUM Market share of 6.50% in Q4FY24 compared to 6.47% in Q4FY23. Its Monthly SIP Inflows for Mar’24 reached ₹ 1,125 cr., up by 23% in YoY period. Company marked 24% YoY and 22% YoY growth in the Online Investors and Distributor User’s base respectively along with 47% YoY increase in AUM from online investors.

Currently company has 5.0 Cr. customers who are served through a network of 1,948 branches across the country.

Figure 2: BANK'S PRESENCE (Source: Company’s presentation)

Fundamentals:

Financial Highlights as of FY24

The Bank’s PAT for FY24 increased to ₹ 13,782 crore from ₹ 10,939 crore in FY23, up 26% YoY. Its PAT for Q4FY24 stood at ₹ 4,133 crore, up 18% YoY from ₹ 3,496 crore in Q4FY23 (up 38% QoQ from ₹ 3,005 crore in Q3FY24).

Its Net Interest Income (NII) for FY24 increased to Rs. 25,993 crore, from Rs. 21,552 crore in FY23, up 21% YoY and for Q4FY24 increased to Rs. 6,909 crore, from Rs. 6,103 crore in Q4FY23, up 13% YoY (up 5% QoQ from Rs. 6,554 crore in Q3FY24). Operating profit for FY24 increased to Rs.19,587 crore from Rs. 14,848 crore, up 32% YoY and for Q4FY24 increased to Rs. 5,462 crore from Rs. 4,647 crore in Q4FY23, up 18% YoY (up 20% QoQ from Rs. 4,566 crore in Q3FY24).

Bank’s Advances (incl. IBPC & BRDS) increased 20% YoY to Rs. 391,729 crore as at March 31, 2024 from Rs. 325,543 crore as at March 31, 2023. Customer Assets, which comprises Advances (incl. IBPC & BRDS) and Credit Substitutes, increased by 20% YoY to Rs. 423,324 crore as at March 31, 2024 from Rs. 352,652 crore as at March 31, 2023.

CASA ratio as of March 31, 2024 stood at 45.5%. Its Average Current deposits grew to Rs. 60,160 crore for Q4FY24 compared to Rs. 58,415 crore for Q4FY23 up 3% YoY. ActivMoney a new product which was launched in Q1FY24 having TD sweep feature, its balance grew 102% YoY to Rs. 47,052 crore.

As of March 31, 2024, GNPA was 1.39% & NNPA was 0.34% compared to GNPA of 1.78% & NNPA of 0.37% in March 31, 2023. The Capital Adequacy Ratio of the Bank, as per Basel III as of March 31, 2024 was 20.5% and company’s Standalone Return on Assets (ROA) for FY24 was 2.61% and for Q4FY24 was 2.97%. Company reported 15.34% Return on Equity (ROE) for FY24 and 17.54% for Q4FY24.

Key Updates:

1. Kotak recently announced the launch of ‘Global Service Account’ (GSA) as a comprehensive current account to meet the unique banking needs of the Service Export Sector. This proposition will enable businesses with international presence, clients and employees, access a wide suite of products and services such as prioritized customer service with a dedicated Relationship Manager, Advisory Services on Forex Markets and Trends, access to Trade Experts and Digital Solutions and Lending solutions for on-time salaries, vendor payments, among others.
2. The bank has also launched Cardless EMI (Equated Monthly Instalments) Payments on Amazon Pay, to provide its pre-approved customers easy access to instant consumer finance, with just their Mobile Number and PAN (Permanent Account Number). The strategic association with Amazon Pay focuses on providing easy credit access and a seamless payment experience to customers, further enhancing their shopping experience.
3. Kotak Mahindra General Insurance Company Limited (“Kotak General Insurance”) a subsidiary of Kotak Mahindra Bank and Zurich Insurance Company Limited (“Zurich”) have entered into definitive agreements for a transaction whereby Zurich will invest (approximately) Rs 4,051 crore to acquire a 51% stake in Kotak General Insurance through a combination of fresh growth capital and share purchase. Further, Zurich will acquire an additional stake of 19% within a period of three years from its initial acquisition (“Transaction”). Zurich’s investment represents the single largest investment by a global strategic insurer in an Indian non-life insurer.
4. Kotak Mahindra Bank Limited has recently partnered with National E-Governance Services Limited (NeSL) to issue its first electronic Bank Guarantee (e-BG) on the latter’s platform. This tie-up will enable the digitisation of Trade, thus helping eliminate paper-based issuance of Bank Guarantees.
5. It recently became the first bank clearing member to clear and settle Foreign Portfolio Investor (FPI) trades in the Exchange Traded Commodities Derivatives segment on Multi Commodity Exchange (MCX).
6. The bank recently launched a new ActivMoney feature which gives customers the benefit of FD like interest up to 7%* p.a., and the flexibility to access their funds anytime. Through ActivMoney, excess funds in the account, beyond a defined threshold, are automatically transferred into a Fixed Deposit, which helps customers in earning a higher interest on their savings.
7. Kotak Mahindra Bank Limited in partnership with Myntra, one of India's leading fashion, beauty and lifestyle destinations, recently launched first-of-its-kind cobranded digital fashion & lifestyle credit card offering loads of benefits to the customers.
8. Kotak also launched a new Privy League programme– an exclusive premium banking programme with unique lifestyle privileges & bespoke financial solutions curated for high net-worth individuals. It comprises privileges across travel with a complimentary MMT Black Elite Annual Membership, Lafayette Luxury Concierge Services which facilitates incomparable experiences ranging from arranging private charters to getting front row seats to international sporting events. It also includes offers on dining with complimentary EazyDiner Prime Annual Membership & attractive discounts on Swiggy.
9. Company has successfully re-domiciled Alchemy India Long Term Fund from Mauritius to India’s GIFT City. The Bank has issued the first-ever foreign portfolio investor (FPI) license to Alchemy’s Fund incorporated in GIFT and registered with IFSCA for relocating from its original jurisdiction to the new jurisdiction. It is the first FPI license issued to a fund incorporated in GIFT by any custodian bank/ Designated Depository Participant (DDP) in the country to relocate an existing fund.
10. Kotak Mahindra Bank Limited (“KMBL”/Kotak) and IndianOil recently launched a highly rewarding, co-branded fuel credit card. IndianOil Kotak Credit Card customers can earn reward points on refueling at any of the IndianOil fuel station in the country. These reward points can be redeemed to get free fuel at IndianOil fuel stations.
11. The bank has opened 100 Gold Loan branches, in this financial year, so far. With the addition of these new branches the bank now offers Gold Loans through its 500 branches spread over 253 cities across the country. The Bank also plans to further expand its Gold Loans branch network by opening another 50 branches in the ongoing financial year.
12. Kotak Mahindra bank also has launched Kotak fyn, a holistic digital platform developed specifically for business banking and corporate clients. The new integrated portal will offer Kotak Bank customers comprehensive digital banking and value-added services across all products, including trade & services, account services, payments, and collections.
13. The company recently acquired 100% of equity shares of Sonata Finance Private Limited (“SFPL”), a Non-Banking Finance Company, classified as an NBFC-MFI, from existing shareholders, subject to regulatory and other approvals, including from Reserve Bank of India.
14. The company also announced the launch of Smart Choice Gold Loan, a smarter solution for Aspirational customers.The key features include fixed monthly interest rate as low as 0.88%, NIL processing fee, same-day disbursement, flexible repayment options, and minimal documentation.
15. In line with Government of India’s vision to promote digital payments and simplify financial transactions, Kotak Mahindra Bank Limited recently launched seamless GST payments through multiple options - UPI, Credit Card, and Debit Card, in addition to the existing Net Banking option. Kotak is India’s first bank that enables tax payers to seamlessly meet their GST obligations by choosing their preferred digital payment mode in the GST portal’s 'E-payment'.

The banking sector has remained a dynamic industry which changes constantly and keeps evolving to meet the changing needs of customers. Nowadays customers are looking for banks that can offer tailored financial solutions to meet their individual needs and KOTAK MAHINDRA BANK is one of the most suitable banks to fulfill all their needs related to Banking and services. In India, the Banking sector is expected to witness a significant growth in Net Interest Income, with a projection of reaching US$338.00bn in 2024. Company has been constantly upgrading itself to provide best in class facilities and services along with the launch of many game changing services such as ActivMoney. Company’s partnerships with different players of various industry will help it to serve a higher number of customers in near future. Considering the growth of banking sector in India, economic growth of the country and banking sector being the pillar of that growth, proven track record of the bank, leading private sector bank with huge growth potential and launch of new products by the bank, investors can invest in this company for long term period with buy in dips strategy.

HET ZAVERI

info@smartinvestment.in

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