Report

Kotak Mahindra Bank (KMB)
All virtue, no vice!
30 Mar 2016
Darpin Shah
darpin.shah@hdfcsec.com
+91-22-6171-7328
Siji Philip
siji.philip@hdfcsec.com
+91-22-6171-7324
Parul Gulati
parul.gulati@hdfcsec.com
+91-22-6639-3035
KOTAK MAHINDRA BANK : INITIATING COVERAGE
Kotak Mahindra Bank (KMB) Structure

Rs 595 / share (80% of SOTP)
Kotak
Mahindra
Prime (KMP)
Auto Finance
Kotak
Mahindra
Investments
(KMI)
Loan Against
Shares
Rs 77/share
Rs 12/share
(10% of SOTP)
(1.6% of SOTP)
Kotak
Securities
(K-sec)
Broking
Rs 21/share
(2.9% of
SOTP)
Kotak
Mahindra
Asset
Management
(K-AMC)
Kotak
Mahindra
Capital
Company
(KMCC)
Asset
Management
Investment
Rs 15/share
(2.1% of
SOTP)
Re 1/share
(0.2% of
SOTP)
Banking
Kotak
Investment
Advisors
KM Old
Mutual Life
Insurance
Offshore &
Alternate
Investments
Life Insurance
Rs 9/share
(1.1% of
SOTP)
Rs 16/share
(2.2% of
SOTP)
Subs value post 20% holding co. discount
All virtue, no vice!

Kotak Mahindra Bank encapsulates most of the virtues
that should characterise a high quality Indian bank. Its
core lending business has sustainably high spreads,
durable fee streams and tightly controlled asset quality
on a strategically constructed loan mix.
A market leading (and synergistic) securities and
investment banking practice align it well with cyclical
tailwinds. Asset management and insurance businesses
look surprisingly small (given the evolution in other
verticals) but are now well positioned to outpace
system growth. The bank is well capitalised at 16%
(with Tier I at 15%).
Valuations are expectedly high at 3.6x standalone
FY18E ABV, adjusted for subs at 20% holdco discount.
Our SoTP of Rs 747 assigns 4.0x to standalone FY18E
ABV and lower multiples of 3.5/2.5x to the autofinance/LAS verticals. We initiate coverage with a BUY.
To us, KMB represents a high-quality and broad-based
play on Indian financial services, not just banks.
A consciously low exposure to stressed sectors (8.5%, lowest

among peers), granular book and focus on working capital
advances (rather than term loans or project finance) have
helped keep a tight leash on asset quality.
After the acquisition of e-VYSB, KMB created a bad bank, with

total funded and non-funded exposures of ~6%, i.e. Rs 25bn,
(2.5% for the merged entity). The cross-sell, product
diversification and cost benefits of the merger with e-VYSB are
now set to accrue. We expect significant improvement in cost
efficiency and branch productivity (parameters where Kotak
currently lags peers, esp post-merger). This improvement is
premised on a widening of the retail product mix, increase in
fee incomes, trimming of redundant costs and manpower and
operating leverage.
On the liability side, retail franchise, SA accretion and urban
visibility are running high with Kotak offering differential
savings rates (like IIB and YES).
Private Banks : PABV vs. RoAA

P/ABV (FY18E)
3.5
KMB
3.0
2.5
IIB
2.0
AXSB
1.5
CUB
DCB
1.0
FB
ICICIB
ROA (FY18E)
0.5
0.7
0.8
0.9
1.0 1.1 1.2 1.3 1.4
1.5 1.6
1.7 1.8
1.9 2.0
SOTP
Kotak Mahindra Bank - Standalone
Kotak Mahindra Prime - Car Finance
Kotak Mahindra Investments - LAS
Kotak Securities - Broking
Kotak Mahindra AMC - Asset Management
Kotak Life - Life Insurance
KMCC - Investment Banking
Kotak Alternative Assets
Offshore Funds
Total Value of Subsidiaries
Less : 20% Holding Discount
Total SOTP Value
Current Value
Upside (%)
Rs bn
Per Share
1,090.9
176.9
28.1
49.2
35.3
36.8
2.6
4.9
14.6
348.3
69.7
1,369.6
1254.5
9.2
595.3
96.5
15.4
26.8
19.3
20.1
1.4
2.7
8.0
190.1
38.0
747.4
684.6
9.2
Rationale
4x FY18E core ABV of Rs 149
3.5x FY18E core NW
2.5x FY18E core NW
15x FY18E Earnings
5% of FY18E AUM
23% APE CAGR FY16-18E; NBAP Margin at 16%.
1x FY18E core NW
7.5% of FY18E AUM
5% of FY18E AUM
Contents
Lending Business : Kotak Mahindra Bank (KMB) : At A Glance ...6
Advances: Granular, diversified and well-picked ........7
Liability franchise: CASA strength to increase ........9
Margins to remain healthy .....12
Cost efficiencies: Room for improvement ....13
Branch productivity .....14
Non Interest Income ...15
Asset Quality : ultra conservative approach ...16
Merger with VYSB .....18
Five Quarters At A Glance ....21
Snapshot .....22
Standalone Financials .......23
Peer valuation .....25
Lending Business : Kotak Mahindra Prime: At A Glance ....26
Car finance .....27
Industry leading auto financier ......28
Financials ....29
Lending Business: Kotak Mahindra Investments : At A Glance ....30

LAS business ....31
Financials ....32
Capital Market Business: Kotal Securities : At A Glance ....33
K sec ...34
Financials ....35
Capital Market Business: Kotak Asset Management Company : At A Glance ...36

KAMC .....37
Financials .38
Capital Market Business - Kotak Mahindra Capital Co: At A Glance ....39
KMCC .....40
Insurance Business - Kotak Life Insurance Co : At A Glance ...41

K-Life ......42
5
Lending Business : Kotak Mahindra Bank
Total Assets
Total Loans
Total Deposits
Total CASA
Rs 1,821bn
Net Impaired
Assets (%)
Rs 1,153bn
Rs 1,309bn
Rs 462bn
1.26%
RoAA(%)
1.4%
CRAR /Tier I
(%)
16.2/15%
Data as of Dec-15
Advances: Granular, diversified and well-picked
KMBs corporate book (~31% of loans) comprises short-term

working capital loans with short tenures. The bank is focusing
on B/S funding (in strong groups) vs. project-level lending,
and is cautious towards the term/projects loans. However,
high-rated corporates will be growth drivers in the future.
The banks total funded and non-funded exposure to
stressed sectors (infra, metals, etc) at 8.5% is the lowest
amongst peers.
About 36% of KMBs loans are fixed rate, which benefits the
bank in a falling interest-rate regime.
A broader footprint, strong Tier-I (15%), diversified book,

improvement in macro environment, bottoming out of the
CV cycle and rising product penetration will help KMB
register strong loan growth. We have factored in loan CAGR
of ~18% over FY16-18E.
Loan growth FY12-18E

Loans (LHS)
Rs bn
2,000
YoY (%)
35
30
1,500
25
20
1,000
15
10
500
5
-
0
FY18E
FY17E
Acquiring e-VYSB in 2QFY15 contributed significantly to KMBs

SME/business banking portfolio, which now stands at ~20% of
loans (vs. <10% earlier). These are mostly working capital
loans with tenures of <1.5 years. While most private banks are
aggressively growing their SME portfolios, KMBs management
has guided for selective growth (It is mindful of SMEs linked to
leveraged corporates/stressed sectors).
While the management guides for outpacing system loan

growth at ~1.8-2.0x in the long run, it is cautious in the short
term and expects growth of ~15% driven by the retail segment
(urban traction) and better-rated corporates.
FY16E
FY15
Mortgages form ~19% of the retail loans, while PL and CV/CE

are ~8% and 6%, respectively.
KMBs consolidated loan book stands at Rs 1.4trn as on Dec15, with 15.5% contribution from KMP (car financing), and
3.4% from KMI (LAS business).
FY14
FY13
Kotak Mahindra Bank (KMB) has a well-diversified loan book

(Rs 1.15trn) with a tilt towards granular segments like retail,
agri and SME (~69% of loans as of Dec-15). The bank has a
presence in several high-yielding segments like self-employed
non-professional (SENP), tractors, cars, etc.
FY12
Source: Bank, HDFC sec Inst Research

7
Advances: Growth unchallenged

Standalone Loan Book
Consol Loan Book
Standalone Composition
YoY (%) - RHS
30.0
406
1411
1347
1255
886
406
861
396
814
382
771
358
717
340
710
329
682
330
684
318
20.0
15.0
10.0
5.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
1QFY13
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
663
5.0
4QFY13
10.0
316
15.0
670
1,153
1,117
1,036
20.0
VYSB
25.0
3QFY13
25.0
406
662
406
646
396
609
382
569
358
530
340
531
329
506
330
505
318
485
454
Consol Composition
CV and CE
Agri Finance
Mortgage Loans
PL
Business Banking
Corp Banking
CV and CE
Mortgage loans
Corp Banking
100%
Agri Finance
PL
Others
Auto loans
Business Banking
100%
80%
80%
60%
60%
40%
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
0%
2QFY13
0%
1QFY13
20%
2QFY13
40%
20%
1QFY13
200
423
400
502
300
600
293
800
316
1,000
KMB
300
30.0
Rs bn
1600
1400
1200
1000
800
600
400
200
0
613
1,200
35.0
2QFY13
YoY (%) - RHS
293
VYSB
570
KMB
Rs bn
1,400
Source: Bank, HDFC sec Inst Research; Data from 1QFY16 onwards includes the e-VYSB merger effect.
8
Consolidated aggregate (funded + non funded) exposure

(%)
Auto Loans
Personal Loans
HL/LAP
Credit cards
Other retail
Total Retail
Commercial Real Estate
Engineering
Automobiles
NBFCs
Telecom
Iron and steel
Drugs and Pharmaceuticals
Chemical, dyes, paints etc
Other Infrastructure
Power
Construction
Fertilisers
Roads and Ports
Other industries
Total
1QFY15
23.9
4.0
2QFY15
23.1
4.2
3QFY15
22.0
4.4
4QFY15
21.9
4.4
1QFY16
15.0
3.6
2QFY16
14.4
3.6
3QFY16
16.1
3.7
13.9
13.7
13.7
14.0
13.2
12.8
12.4
0.6
7.6
50.0
3.6
4.5
4.0
1.5
5.2
9.4
5.9
16.0
100.0
0.5
5.8
47.3
3.8
5.0
3.6
1.5
1.6
2.0
2.5
2.8
2.8
9.5
0.9
0.4
16.5
100.0
0.6
7.5
48.1
3.8
4.5
3.9
1.4
2.2
1.8
2.4
4.0
2.4
8.8
0.7
0.4
15.6
100.0
0.6
9.4
50.3
2.9
5.0
3.2
3.3
2.5
2.3
3.0
7.5
2.0
7.9
0.8
0.3
9.1
100.0
0.4
17.2
49.4
3.7
4.1
3.4
3.0
3.0
1.7
2.2
2.5
1.7
6.1
0.8
0.4
18.2
100.0
0.4
11.7
42.9
4.3
3.9
3.5
3.5
2.6
2.4
1.5
2.2
2.2
1.5
1.6
0.8
0.6
26.6
100.0
0.5
1.7
34.4
4.7
4.0
4.0
3.7
2.6
2.2
2.2
1.9
1.5
1.5
1.4
1.0
0.6
34.1
100.0
Liability franchise: CASA strength to increase
5
FY18E
FY17E
FY16E
FY14
FY15
0
FY13
Deposits : Quarterly trend

KMB
Rs bn
1,400
VYSB
YoY (%) - RHS
1,232
1,309
2QFY16
3QFY16
749
4QFY15
1,168
731
3QFY15
1QFY16
681
2QFY15
460
614
1QFY15
460
591
4QFY14
447
547
3QFY14
412
526
2QFY14
390
525
1QFY14
400
200
400
510
4QFY13
600
409
800
413
1,000
423
1,200
377
With e-VYSBs network, wide suite of retail products, and

improving branch productivity, we expect KMBs CASA to grow
at 37% CAGR over FY15-18E and form ~37.5% of total
deposits.
10
500
515
15
3QFY13
The avg. cost of SA remained lower at 5.5.% for KMB (stable

over the past few quarters) vs. peers at ~6%.
20
1,000
FY12
25
362
Avg. SA deposits at e-VYSB branches grew strongly over the

past three quarters, with ~31% in 3Q, 23% in 2Q and 18% in
1Q.
%
35
30
1,500
455
YoY (%) - RHS
2QFY13
The strong growth in SA deposits nudged up KMBs share of

low-cost deposits. KMBs CASA proportion improved from ~32%
in FY12 to ~36.4% in FY15. Coupled with the CASA deposits, its
sweep deposits stood at ~5.8%.
Deposits (LHS)
Rs bn
2,000
359
The banks SA deposits grew at 41% CAGR during FY12-15 as

against 71/40% CAGR for YES/IIB, which also had higher savings
deposit rates at 7/6%.
Deposits : FY12-18E
416
After the liberalisation of savings interest rates, KMB was one of

the few private banks to offer differential interest rates. It offers
6% on deposits above Rs 1 lakh and 5% below <Rs 1 lakh.
1QFY13
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
Source: Banks, HDFC sec Inst Research

10

80.0
YES
20.0
10.0
60.0
40.0
20.0
IIB
AXSB
3QFY16
IIB
HDFCB
2QFY16
AXSB
HDFCB
KMB
1QFY16
ICICIBC
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
272
462
447
401
65
64
500
50.0
400
40.0
146
146
148
126
138
135
130
123
134
119
119
231
212
190
188
163
154
151
149
134
123
111
119
20
20
16
66
64
68
69
VYSB
4QFY15
KMB
15
19
19
15
18
15 17
300
3QFY15
YES
KMB
2QFY15
CASA (%) Vs. Peers

100
1QFY15
40.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15 14 17
69
68
70
71
Rs bn
4QFY14
17
200
3QFY14
15
1QFY15 13 18
4QFY14
3QFY14
13 17
2QFY14 13 16
71
71
TD
2QFY14
15 14
66
67
Deposits Break-up
1QFY14
ICICIBC
3QFY16
50.0
2QFY16
14 13
13 13
1QFY14 13 15
4QFY13
3QFY13
2QFY13
73
61
66
SA
1QFY16
AXSB
4QFY15
3QFY15
IIB
2QFY15
13
66
68
CA
1QFY15
4QFY14
HDFCB
3QFY14
19
16 12
1QFY13 13 13
4QFY12
3QFY12
16 11
16 10
2QFY14
1QFY14
KMB
4QFY13
30.0
3QFY13
2QFY13
1QFY13
2QFY12
1QFY12
Liability franchise
CASA : Quarterly trend
YoY (%) - RHS
30.0
ICICIBC
IIB
AXSB
ICICIBC
20.0
10.0
SA Growth Vs. Peers

140.0
YES
120.0
100.0
YES
HDFCB
KMB

11
Margins to remain healthy

Calc YoA
NIM RHS
%
5.2
5.0
4.8
4.6
4.4
4.2
4.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3.8
NIM vs. Peers
NIM : continue to remain healthy (FY12-18E)
KMB
4.68
HDFCB
IIB
AXSB
ICICIBC
YES
5.5
4.64
4.55
Calc CoF
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
3QFY13
Yield / COF And NIM Movement
2QFY13
KMB enjoys one of the highest NIMs (4.3%) in the industry,

driven by a steady rise in CASA proportion, diversified and
superior asset mix, and ~36% of the book being fixed in nature.
High capital adequacy also helps. The banks focus is on selfemployed non-professional (SENP) customers to generate
higher yields vs. peers.
Despite similar CASA proportion, e-VYSBs NIM was in the 3.53.7% range. Hence, post the merger, KMBs NIM dropped ~6070bps to ~4.2% still the best in the industry.
With the continued SA momentum, focus on high-yielding SENP
customers, increasing proportion of CV/CE business (<6% vs.
20% in FY12) and higher proportion of fixed rate book (lower
impact of the revised MCLR guidelines), we expect KMBs
calculated. NIM to remain healthy at ~4.5% over FY16-18E.
1QFY13
4.58
KMB
5.0
4.61
4.51
4.5
HDFCB
IIB
ICICIBC
4.0
4.42
3.5
AXSB
YES
3.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
FY18E
3QFY14
FY17E
2QFY14
FY16E
1QFY14
FY15
4QFY13
FY14
3QFY13
FY13
2QFY13
FY12
1QFY13
2.5
12
Cost efficiencies: Room for improvement
40.0
20.0
12.8
12.5
15.9
4.2
8.2
4.2
4.1
7.7
30.0
9.3
3.8
7.4
4.4
7.0
3.6
6.3
3.5
6.1
3.4
6.0
3.4
6.1
5.6 3.3
5.1 3.0
5.0
5.3 3.1
10.0
10.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
C/I Ratio (%) vs. Peers

KMB
%
80.0
HDFCB
IIB
AXSB
ICICIBC
YES
70.0
60.0
KMB
HDFCB
50.0
IIB
40.0
ICICIBC
2QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
1QFY16
AXSB
3QFY16
YES
30.0
4QFY13
We believe improving productivity (more product offerings

across geographies), higher cross sell and contained opex (led
by merger synergies) will drive operational/cost efficiency. The
management is confident of achieving C-I ratio of <50% in
FY17E. We have factored in C-I ratio of 55.3% and C-AA at 3.1%
over FY16-18E.
YoY (%) - RHS
15.0
3QFY13
KMBs cost structures are relatively higher. The in-house legal

team and the VYSB acquisition have pushed the banks staff
cost/branch to Rs 4.8mn vs. private peers, who spend about Rs
2.7-3.3mn/branch. Thus, the banks cost efficiency ratios are
below par, with C-I ratio and C-AA at ~52% and 2.9%,
respectively, vs. 32-47% and 1.8-2.5% (except IIB at 3%) for
peers.
VYSB
50.0
2QFY13
Non-interest income contribution at ~29% of total income and

~1.6% of avg. assets is lower than private players (~1.7-2.7%).
KMB
Rs bn
20.0
1QFY13
KMBs productivity (per branch) is lower than its private peers.

The loan/branch is ~21% lower than AXSB/YES and ~13% vs.
HDFCB (retail-oriented bank). Its SA/branch, too, is at the lower
end of the spectrum (Rs 200mn) vs. peers (Rs 240-330mn).
Opex : Quarterly Trends
2QFY13
KMBs cost efficiency ratios are below par because of (1) Lower
productivity per branch, (2) Lower non-interest income
contribution (% of total income and average assets), and (3)
Relatively higher cost structure despite superior NIM.
1QFY13

13
Branch productivity : room for improvement

C-AA assets (%)
Deposits / branch :
KMB
HDFCB
IIB
AXSB
ICICIBC
YES
KMB
4.8
KMB
Rs mn
1,600
5.3
HDFCB
IIB
AXSB
ICICIBC
YES
1,400
1,200
IIB
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
CASA / branch :
Loans / branch :
KMB
Rs mn
1,400
600
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
1.3
4QFY13
ICICIBC
YES
1QFY13
1.8
IIB
ICICIBC
800
3QFY13
AXSB
2.3
2QFY13
2.8
KMB
HDFCB
1,000
3QFY16
HDFCB
3.3
2QFY16
3.8
YES
AXSB
1QFY16
4.3
HDFCB
IIB
AXSB
ICICIBC
KMB
YES
1,200
YES
AXSB
KMB
Rs mn
700
HDFCB
IIB
AXSB
ICICIBC
YES
AXSB
600
500
ICICIBC
1,000
IIB
800
HDFCB
400
HDFCB
ICICIBC
KMB
300
IIB
YES
200
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
1QFY13
100
600

14
Non Interest Income

Non Interest Income : Quarterly Trend
Fee Income : Growth and % of Loans
Non int. income (Rs bn)
Fee income (Rs bn)
YoY (RHS %)
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
120.0
% of loans (RHS)
2.5
2.0
1.5
1.0
0.5
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
YES
HDFCB
3QFY16
2QFY16
KMB
1QFY16
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
ICICIBC
4QFY15
KMB
15.0
YES
IIB
3QFY15
20.0
ICICIBC
AXIS
2QFY15
HDFCB
25.0
AXSB
1QFY15
30.0
IIB
4QFY14
YES
AXSB
35.0
HDFCB
3QFY14
40.0
KMB
%
2.9
2.7
2.5
2.3
2.1
1.9
1.7
1.5
1.3
2QFY14
IIB
ICICIBC
45.0
YES
1QFY14
ICICIBC
4QFY13
AXSB
3QFY13
IIB
2QFY13
HDFCB
1QFY13
KMB
1QFY15
Non Interest Income % of Avg. Assets
Non Interest Income % of Total Income

%
50.0
4QFY14
1QFY13
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
(20.0)
3QFY14
2QFY14
20.0
1QFY14
40.0
4QFY13
60.0
3QFY13
80.0
2QFY13
100.0

15
Asset Quality : ultra conservative approach
Only a handful of banks (mostly private banks with retail

lending tilt) have been able to weather Indias macro
slowdown, sharp decline in commodity prices and the RBI AQR
to come out reasonably unscathed on asset quality.
KMBs asset quality remains relatively healthy, led by a

diversified loan book which focuses on granular
retail/SME/agri loans. The lower exposures to stressed
segments and predominance of short-term working capital
loans in the lending mix has also helped.
KMBs marginally higher net impaired assets at 1.3% (NNPA 1%

+ restructured book 0.3%) can be attributed to the VYSB
acquisition and the buyout of stressed loans.
Unlike its peers, KMB has not utilised the additional

regulatory forbearance like ARC sale, flexible 5:25
restructuring and SDR.
After e-VYSBs acquisition, KMB created a bad bank, with

total funded and non-funded exposures of ~6%, i.e. Rs 25bn,
(2.5% for the merged entity). The bad bank includes NPAs,
restructured assets, sale to ARC and standard stressed assets
largely from the corporate segment.
Asset quality at KMBs subsidiaries is at comfortable levels. As
of Dec-15, KMPs (car finance) NNPAs were 0.4%, while the
LAS business (Kotak Mahindra Investments) had NNPAs of
0.06% only.
At a consolidated level, GNPAs stood at Rs 28.7bn, i.e. 2.01%,

and NNPAs at Rs 12bn, i.e. 0.85%.
We expect KMBs asset quality to remain flawless over the

FY16-18E period, given the lower exposure to stressed
sectors and cautious lending in the corporate sector. We
expect GNPAs of ~2% by FY18E after factoring in avg.
slippages of 1.05% and credit cost of 0.5%. For KMP, we have
conservatively factored in GNPAs of 0.77% by FY18.
Asset Quality : gradual improvement expected

GNPA (Rs bn; LHS)
NNPA (Rs bn; LHS)
GNPA (%)
NNPA (%)
35.0
2.5
30.0
2.0
25.0
20.0
1.5
15.0
1.0
10.0
0.5
5.0
-
FY12
FY13
FY14
FY15
FY16E
FY17E
FY18E
16
Asset Quality
Standalone Asset Quality : recent spike led by the merger
NNPA (%)
%
GNPA (LHS)
2.5
2.0
20.0
1.5
1.0
15.0
1.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
Peer comparison : Impaired assets (%)
KMP
1QFY13
Subsidiaries NNPA : near flawless

KMI
KMB
%
6.0
2.0
5.0
1.5
4.0
HDFCB
IIB
AXSB
ICICIBC
YES
ICICIBC
AXSB
3.0
1.0
KMB
2.0
0.5
IIB
HDFCB
1.0
3QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
YES
2QFY13
1QFY13
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
2QFY16
2.5
0.5
5.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
10.0
3QFY14
0.5
5.0
2.0
25.0
1.5
15.0
10.0
NNPA (%)
%
30.0
2QFY14
20.0
GNPA (%)
2.5
1QFY14
25.0
NNPA (LHS)
Rs bn
35.0
4QFY13
GNPA (%)
3QFY13
NNPA (LHS)
Rs bn
30.0
2QFY13
GNPA (LHS)
Consol Asset Quality : Subsidiaries performing well

17
Merger with VYSB
The progress in 9MFY16
KMB acquired VYSB via a merger in 2QFY15. The share swap ratio
was 0.725 shares of KMB for every share of VYSB, effectively
valuing VYSB at Rs 160bn as at Nov-14.
KMB maintains its guidance on complete integration by

April/May 2016 .
Aggregate integration cost of Rs 1.42bn incurred till 3QFY16

(total integration cost guidance at Rs 2.0bn).
Increase in branch network from 641 to 1,214 (fourth largest

amongst private banks in the country) with no major overlap
and deepening presence in the south, where VYSB has a strong
foothold.
Stable staff cost despite adding ~2,000 employees and

continued branch rationalisation and rental savings.
There is continued momentum in customer acquisition, with

additions of ~100,000 customers / month.
Increase in loan book to Rs 1,210bn (from Rs 814bn), with

diversification across segments. The bank benefitted from
access to VYSBs traditionally strong of SME lending franchise
(38% of loans vs. <10% for KMB).
Avg. Saving deposits at e-VYSB branches reported strong

growth of ~31% YoY vs. ~23% in 2QFY16 and 18% in 1QFY16.
Improvement in insurance cross sell during 9MFY16 and rising

traction in credit cards.
KMB created a bad bank, with total funded and non-funded

exposures of ~6%, i.e. Rs 25bn, (2.5% for the merged entity).
The bad bank includes NPAs, restructured assets, sale to ARC
and standard stressed assets largely from the corporate
segment.
KMB has largely provided for e-VYSBs stressed assets

(including provisions on SR and credit substitutes).
The merger led to :
Liability profile was stable, as both banks had CASA proportion

at similar levels (31-33%).
With lower proportion of impaired assets and better Tier-I, the
acquisition was not a drag on KMBs balance sheet. After the
merger, GNPAs stood at ~1.6% (vs. reported standalone KMB of
1.6%) and Tier-I of 15%.
18
Complementarity to Drive Higher Customer Wallet Share

Fuller Customer Segment Coverage
Significant Product Complementarities

VYBS
KMB
Merged
Commercial Banking (CV,CE etc)
Consumer Finance
Agriculture/Tractor
VYBS
KMB
Merged
Large Corporates
Mid Corporates
SMEs (including Traders)
High Net Individuals
Deposits - CA
Mass Affluent
Deposits - SA
Mass Market
NRIs
Private Banking / Broking / IB
MNCs
Asset Management / Insurance
Corporate & Business Banking
Fees (Fx, Trade)
Larger Share of Customer Wallet

Expand Customer / Product horizons
Serve customers nationally and internationally
19
Merger with VYSB

Retail loans break up
Branch distribution region wise
Other 8%
East 5%
West 30%
South 38%
Mortgages
39%
Commercial &
Auto 40%
PL 12%
North 27%
Deposits break up
Loan book break up

Agri 12%
CA 15%
SME 17%
SA 17%
Retail 40%
TD 68%
CD 8%
Large 33%

20
KMB : Five Quarters At A Glance

Rs mn
Net Interest Income
Non Interest Income
Operating income
Operating expenses
Pre provision profits
Provisions and contingencies
PBT
Provision for Tax
PAT
Balance Sheet items/ratios
Deposits (Rs bn)
CASA (%)
Advances (Rs bn)
Retail (%)
Agri (%)
Business banking (%)
Corp (%)
Others (%)
CD ratio (%)
Profitability
Calc. Yield on Advances (%)
Calc. Cost of Funds (%)
NIM (%)
Cost-Income Ratio (%)
Tax Rate (%)
Asset Quality
Gross NPA (Rs bn)
Net NPA (Rs bn)
Gross NPAs (%)
Net NPAs (%)
Coverage Ratio (%)
Restructured Book (%)
3QFY15
15.5
7.0
22.5
12.3
10.2
0.9
9.3
3.2
6.1
4QFY15
11.2
6.7
17.9
9.3
8.6
0.7
7.9
2.7
5.3
1QFY16
16.0
5.9
21.9
15.9
6.0
3.1
2.9
1.0
1.9
2QFY16
16.8
6.2
22.9
12.5
10.4
1.8
8.7
3.0
5.7
3QFY16
17.7
7.2
24.9
12.8
12.1
2.4
9.7
3.4
6.3
YoY (%)
13.9
3.2
10.6
4.1
18.4
157.3
4.7
6.1
4.0
QoQ (%)
5.2
17.3
8.5
2.7
15.4
33.4
11.7
12.2
11.5
1,190
31.7
1,052
30.1
14.3
20.1
34.6
0.9
88.4
749
36.4
662
39.6
18.3
9.7
30.7
1.8
88.4
1,168
34.3
1,036
32.6
14.7
20.7
30.1
1.8
88.7
1,232
36.2
1,117
32.2
15.3
20.3
30.4
1.8
90.6
1,309
35.3
1,153
32.7
14.6
20.3
30.6
1.9
88.1
10.0
362.3
9.6
253.1
29.7
22.0
(406.9)
102.1
(29.8)
6.3
(97.0)
3.3
44.4
(75.0)
1.7
18.3
10.6
(253.6)
11.7
7.2
3.9
54.8
34.1
9.2
5.2
3.4
51.9
33.6
14.4
8.5
5.0
72.7
34.9
11.4
6.6
4.2
54.5
34.4
11.1
6.4
4.2
51.6
34.6
(61.4)
(78.4)
31.2
(321.9)
44.3
(23.7)
(20.0)
2.6
(290.0)
14.6
19.8
9.0
1.9
0.9
54.7
0.7
12.4
6.1
1.9
0.9
50.8
0.2
24.2
10.8
2.3
1.0
55.5
0.4
26.6
11.7
2.4
1.0
56.0
0.4
26.9
11.1
2.3
1.0
58.7
0.3
35.6
23.7
44.7
10.9
398.6
(35.2)
1.3
(4.9)
(4.6)
(8.3)
268.5
(6.1)
Source: Banks, HDFC sec Inst Research; Proforma of VYSB + KMB for 3QFY15; 4QFY15 - KMB standalone; 1QFY16 onwards merged entity
21
KMB : Snapshot
Rs bn
Loans
Chg (%)
Deposits
Chg (%)
Net Interest Income
Chg (%)
NIM (%)
Core C-I Ratio (%)
PPOP
Chg (%)
PBT
Chg (%)
PAT
Chg (%)
EPS (Rs)
Core ABV (Rs)
Core RoAA (%)
Core RoAE (%)
GNPA (%)
NNPA (%)
FY13
484.7
24.0
510.3
32.4
32.1
27.6
4.6
52.5
21.6
30.3
19.7
23.3
13.6
25.4
18.2
117.2
1.83
15.6
1.6
0.6
FY14
530.3
9.4
590.7
15.8
37.2
16.0
4.6
51.5
25.8
19.5
22.7
15.2
15.0
10.4
19.5
145.9
1.76
13.83
2.0
1.1
FY15
661.6
24.8
748.6
26.7
61.7
65.8
4.7
54.8
41.9
62.6
37.5
65.2
24.8
65.1
24.2
168.3
1.94
14.13
1.9
0.9
FY16E
1,197.3
12.2
1,348.4
11.6
73.3
18.8
4.4
60.9
41.5
(1.1)
31.3
(16.7)
20.8
(16.1)
11.4
118.1
1.41
11.00
2.3
1.2
FY17E
1,398.7
16.8
1,589.4
17.9
85.1
16.2
4.6
57.2
52.9
27.5
44.4
42.1
29.6
42.1
16.1
131.2
1.45
11.83
2.3
1.2
FY18E
1,659.4
18.6
1,885.7
18.6
97.5
14.5
4.5
55.3
63.2
19.5
54.8
23.4
36.5
23.4
19.9
148.8
1.54
13.40
2.0
0.9
22
KMB : Standalone Financials

Income Statement
(Rs mn)
Interest Earned
Interest Expended
Net Interest Income
Other Income
Fee Income (CEB)
Treasury Income
Total Income
Total Operating Exp
Employee Expense
PPOP
Provisions
Prov. for NPAs (incl.
std prov.)
PBT
Provision for Tax
PAT
Balance Sheet
FY14
87,671
50,471
37,200
13,997
8,531
1,818
51,198
25,426
11,722
25,772
3,047
FY15
97,199
54,961
42,237
20,285
12,263
3,148
62,522
32,547
14,667
29,975
1,645
FY16E
162,546
89,266
73,280
26,649
17,361
3,875
99,930
58,473
29,120
41,456
10,202
FY17E
202,258
117,119
85,140
32,593
22,029
4,250
117,733
64,856
32,521
52,877
8,468
FY18E
233,116
135,644
97,472
39,329
28,210
3,750
136,801
73,626
36,719
63,175
8,382
1,473
2,582
9,727
7,993
7,907
22,725
7,699
15,025
28,330
9,670
18,660
31,255
10,439
20,816
44,409
14,833
29,576
54,793
18,301
36,492
(Rs mn)
SOURCES OF FUNDS
Share Capital
Reserves
Shareholder's Funds
Savings
Current
Term Deposit
Total Deposits
Borrowings
Other Liabilities
Total Liabilities
FY14
FY15
FY16E
FY17E
FY18E
3,852
3,862
9,163
9,163
9,163
118,899
137,579
227,754
253,860
286,080
122,751
141,441
236,917
263,022
295,243
100,870
140,361
272,332
359,478
458,334
87,408
131,813
214,883
231,000
248,325
402,445
476,429
861,205
998,912 1,179,038
590,723
748,603 1,348,420 1,589,390 1,885,697
129,041
121,497
223,789
246,166
270,779
33,338
48,580
85,054
93,559
102,915
875,853 1,060,121 1,894,179 2,192,136 2,554,634
APPLICATION OF
FUNDS
Cash & Bank Balance
Investments
G-Secs
Advances
Fixed Assets
Other Assets
Total Assets
59,799
62,624
141,737
160,047
171,731
254,845
304,211
480,040
551,435
633,296
174,654
228,817
401,155
468,870
546,852
530,276
661,607 1,197,287 1,398,663 1,659,414
11,069
12,067
16,291
17,920
19,712
19,863
19,612
58,824
64,072
70,482
875,853 1,060,121 1,894,179 2,192,136 2,554,634
23
KMB Financials
(Rs mn)
Valuation ratios
EPS
Earnings growth (%)
BVPS (ex reval.)
Adj. BVPS (Core)
ROAA (%)
ROAE (%)
ROAE (%) (Core)
Core P/E (x)
Core P/ABV (x)
P/PPOP (x)
Dividend Yield (%)
PROFITABILITY
Yield on Advances (%)
Yield on Investment (%)
Cost of Funds (%)
Cost of Deposits (%)
Core Spread (%)
NIM (%)
OPERATING
EFFICIENCY
Cost/Avg. Asset Ratio
(%)
Cost-Income Ratio (Excl
Treasury)
FY14
FY15
FY16E
FY17E
FY18E
19.5
10.4
153.4
145.9
1.76
13.8
13.8
25.7
3.43
10.2
0.1
24.2
24.2
176.2
168.3
1.94
14.1
14.1
18.4
2.64
8.8
0.1
11.4
11.6
126.1
118.1
1.41
11.0
11.0
50.2
4.83
15.1
0.1
16.1
42.1
140.0
131.2
1.45
11.8
11.8
34.3
4.22
11.9
0.1
19.9
23.4
157.2
148.8
1.54
13.1
13.4
26.7
3.58
9.9
0.1
13.2
7.5
7.0
6.9
6.1
4.6
12.5
7.9
6.9
6.8
5.6
4.7
12.7
8.0
7.3
6.7
5.4
4.4
12.2
7.9
6.9
6.6
5.4
4.6
12.0
7.8
6.8
6.5
5.2
4.5
3.0
3.4
4.0
3.2
3.1
51.5
54.8
60.9
57.2
55.3
(Rs mn)
BALANCE SHEET
STRUCTURE RATIOS
Loan Growth (%)
Deposit Growth (%)
C/D Ratio (%)
FY14
FY15
FY16E
FY17E
FY18E
9.4
15.8
89.8
24.8
26.7
88.4
81.0
80.1
88.8
16.8
17.9
88.0
18.6
18.6
88.0
Equity/Assets (%)
14.0
13.3
12.5
Equity/Advances (%)
CASA (%)
Total Capital Adequacy
Ratio (CAR)
Tier I CAR
ASSET QUALITY
Gross NPLs (Rs bn)
Net NPLs (Rs bn)
Gross NPLs (%)
Net NPLs (%)
Coverage Ratio (%)
Provision/Avg. Loans (%)
ROAA TREE
Net Interest Income
Non Interest Income
Treasury Income
Operating Cost
Provisions
Provisions for NPAs
Tax
ROAA
Leverage (x)
ROAE
23.1
31.9
21.4
36.4
19.8
36.1
12.0
18.8
37.2
18.8
17.2
16.7
15.8
15.0
17.8
16.2
16.1
15.3
14.6
10.6
5.7
2.0
1.1
45.9
0.3
12.4
6.1
1.9
0.9
50.8
0.4
27.9
14.6
2.3
1.2
47.8
1.0
32.0
16.1
2.3
1.2
49.5
0.6
32.8
15.4
2.0
0.9
53.2
0.5
4.34%
1.63%
0.21%
2.97%
0.36%
0.15%
0.90%
1.75%
7.89
13.83%
4.36%
2.10%
0.33%
3.36%
0.17%
0.20%
1.00%
1.93%
7.33
14.13%
4.96%
1.80%
0.26%
3.96%
0.69%
0.48%
0.71%
1.41%
7.81
11.00%
4.17%
1.60%
0.21%
3.17%
0.41%
0.35%
0.73%
1.45%
8.17
11.83%
4.11%
1.66%
0.16%
3.10%
0.35%
0.30%
0.77%
1.54%
8.50
13.07%
11.6
17.8
37.5
24
Banks : Peer valuation

AXSB
CUB
DCBB
FB
ICICIBC #
IIB
KMB#
BOB
OBC
SBIN #
UNBK
Mcap
(Rs bn)
1,053
55
22
80
1,379
558
1,255
337
27
1,530
89
CMP
TP
ABV (Rs)
P/E (x)
Rating
(Rs)
(Rs) FY16E FY17E FY18E FY16E FY17E FY18E
444 BUY
537
206
236
275 12.7 11.2
9.6
93
BUY 107
46
53
60 12.3 11.0
9.4
76
BUY 101
57
63
69 12.8 12.7
10.0
47
BUY
69
43
48
53 12.4
9.1
7.7
238
BUY 285
113
124
141
8.7
8.3
6.4
946
BUY 1,045
289
333
387 24.1 18.4
14.9
685
BUY
747
118
131
149 50.2 34.3
26.7
146
BUY 147
74
88
113 -17.3 13.6
8.5
89
BUY 124
172
177
212
8.8
4.0
3.3
197
BUY 218
110
115
132
9.8
8.1
6.2
129
BUY 137
137
152
179
6.2
4.0
3.1
P/ABV (x)
RoAE (%)
RoAA (%)
FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E
17.2 16.9 17.1 1.67 1.61 1.56
2.16 1.88 1.62
15.7 15.5 15.9 1.52 1.50 1.53
2.03 1.77 1.55
10.1
9.2 10.6 0.95 0.77 0.79
1.33 1.22 1.10
8.0 10.0 10.9 0.74 0.89 0.91
1.08 0.98 0.88
14.2
12.4 13.9 1.78 1.58 1.70
1.62 1.42 1.18
16.8 16.3 17.4 1.88 1.98 1.99
3.27 2.84 2.44
10.7 11.9 13.4 1.38 1.45 1.54
4.83 4.22 3.58
-5.0
6.3
9.4 -0.27 0.32 0.46
1.96 1.66 1.29
2.3
4.9
5.6 0.13 0.27 0.30
0.52 0.50 0.42
8.7
9.6 11.3 0.51 0.57 0.65
1.26 1.22 1.02
7.4 10.3 12.3 0.37 0.53 0.63
0.94 0.85 0.72
Source: HDFC sec Inst Research, #Adjusted for subsidiaries
25
Lending Business : Kotak Mahindra Prime
Kotak Mahindra Prime

(KMP)
Total Loans
Total car
Loans
Calc. NIM (%)
NNPA (%)
RoAA (%)
Contribution to
consol
Rs 219bn
Rs 164bn
4.7%
0.4%
2.4%
Loans : 15%
PAT : 15%
Per share
value for
KMB: Rs
77/share
Data as of Dec-15; per share vale after 20% holdo discount
26
KMP - Car finance
25.0
150
20.0
100
15.0
10.0
50
5.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
Cal. NIM
%
6.0
5.6
5.5
5.0
5.2
5.2
5.1
4.8
4.5
5.2
4.9
4.8
4.5
4.8
4.8
4.8
4.8
4.6
4.7
4.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
3.5
2QFY14
We have assigned 3.5x to KMPs core adj. networth to arrive

at a valuation of Rs 177bn i.e. Rs 96.5 per share of KMB. After
a 20% holdco discount, KMP contributes Rs 77/sh to our SOTP
Car Loans YoY
30.0
1QFY14
Over FY16-18E, we expect core earnings to grow at ~12% CAGR,

with ~14% AUM growth and NIM decline of ~15bps to 4.8%. We
conservatively factor in higher provisioning cost (~31% CAGR)
and expect PAT growth of ~11% CAGR. Return ratios are
expected to further moderate with RoAA of ~2.4%.
Total Loans YoY
200
4QFY13
KMPs total loans grew ~15% in 9MFY16, led by similar growth

in auto loans. Core earnings grew ~8% and PAT was flat at Rs
3.7bn. KMP contributed ~15% each of consolidated
loans/profits in the same period.
Car Loans
%
35.0
3QFY13
KMPs disbursements and AUM grew at 9% and 12.6% CAGR

during FY12-15. With ~30bps fall in calculated NIM (5%), core
earnings grew ~12%. Further, a ~40% rise GNPAs (Rs 1.5bn,
77bps) pushed up provisioning cost by ~49% CAGR. This, in
turn, resulted in PAT growth of <10% CAGR and RoAA declined
to ~2.8% from ~3.1% in FY12.
Total Loans
Rs bn
250
2QFY13
As of Dec-2015, KMP had 78 branches in 18 states and a wide

network of direct marketing associates, brokers and agencies.
Loan book and growth
1QFY13
KMP is a leading NBFC that provides asset financing for

passenger cars, multi-utility vehicles and pre-owned cars. It also
offers inventory and infrastructure funding to car dealers. As of
FY15, KMP contributed ~22% of total loans and ~17% of
consolidated profits of KMB
1QFY13

27
KMP : Industry leading auto financier

PAT & Growth
ROAA
%
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
2.0
1QFY14
(5.0)
4QFY13
800
3QFY13
2.2
2QFY13
2.5
2.4
2.4
3QFY16
2.4
900
1QFY13
2.6
2.7
2QFY16
5.0
2.7
2.7
1QFY16
1,000
2.6
4QFY15
10.0
2.7
2.9
2.7
3QFY15
1,100
2.8
2QFY15
15.0
1QFY15
1,200
2.9
2.9
4QFY14
20.0
2.9
2.9
3QFY14
1,300
3.0
2QFY14
25.0
1QFY14
1,400
3.1
3.2
4QFY13
30.0
3QFY13
YoY
2QFY13
KMP - PAT (LHS)
1QFY13
Rs mn
1,500
NNPA :
Rs mn
1,200
NNPA (LHS)
NNPA (RHS %)
0.6
1,000
0.5
800
0.4
600
0.3
400
0.2
200
0.1
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
0
1QFY13

28
KMP : Financials
Quarterly (Rs bn)
Total Loans
YoY (%)
Car Loans
YoY (%)
% of total loans
Net Interest Income
YoY (%)
cal. NIM (%)
Total Income
YoY (%)
PBT
YoY (%)
PAT
YoY (%)
NNPA (Rs mn)
NNPA (%)
(Rs bn)
Total Loans
YoY (%)
Net Interest Income
YoY (%)
Calc. NIM (%)
PBT
YoY (%)
PAT
YoY (%)
RoAA (%)
RoAE (%)
GNPA (%)
NNPA (%)
1QFY14
170.9
21.1
130.6
17.0
76.4
2.1
31.4
4.8
25.3
26.5
1.8
28.8
1.2
24.5
310.0
0.2
FY15
191.5
10.0
9.1
6.6
4.96
7.7
3.0
5.1
3.3
2.78
16.4
0.8
0.4
2QFY14
169.5
11.7
131.4
11.7
77.5
2.2
25.0
5.2
26.5
17.8
1.9
12.4
1.3
9.6
510.0
0.3
FY16E
214.2
11.9
10.0
10.0
4.91
8.3
7.0
5.4
7.0
2.68
15.0
0.8
0.4
3QFY14
168.6
5.1
130.7
6.8
77.5
2.2
5.9
5.1
26.0
6.6
1.9
20.3
1.2
17.1
630.0
0.4
FY17E
244.4
14.1
11.1
11.2
4.83
9.2
10.5
6.0
10.5
2.61
14.3
0.8
0.3
4QFY14
173.7
2.1
132.7
3.9
76.4
2.4
20.6
5.6
28.3
17.9
1.9
10.3
1.3
5.9
560.0
0.3
1QFY15
185.2
8.3
134.2
2.8
72.5
2.2
5.4
4.8
26.7
5.5
1.8
2.2
1.2
2.6
650.0
0.3
FY18E
284.6
16.5
12.7
14.8
4.81
10.5
15.0
6.9
15.0
2.61
14.3
0.8
0.3
2QFY15
188.2
11.0
139.5
6.2
74.1
2.3
3.2
4.9
27.8
4.9
1.9
(0.5)
1.3
640.0
0.3
3QFY15
190.7
13.1
142.3
8.9
74.6
2.2
2.3
4.6
26.8
3.1
1.8
(3.7)
1.2
(2.4)
830.0
0.4
RoAA TREE
Net Interest Income
Non Interest Income
Operating Cost
Provisions
Tax
ROAA
Leverage (x)
ROAE
4QFY15
197.1
13.4
147.3
10.9
74.7
2.5
5.0
5.2
30.9
9.2
2.2
13.5
1.4
13.5
788.3
0.4
FY15
4.96%
1.18%
1.78%
0.12%
1.46%
2.78%
5.90
16.39 %
1QFY16
197.3
6.5
150.7
12.3
76.4
2.4
8.8
4.8
27.7
3.7
1.8
1.2
(0.8)
986.4
0.5
2QFY16
200.1
6.3
157.5
13.0
78.7
2.4
4.4
4.8
29.8
7.2
2.0
2.6
1.3
1.6
800.5
0.4
3QFY16
218.5
14.6
164.3
15.4
75.2
2.5
12.3
4.7
29.7
10.8
1.9
5.5
1.3
5.0
874.0
0.4
FY16E
4.91%
1.18%
1.81%
0.20%
1.41%
2.68%
5.60
14.99%
FY17E
4.83%
1.15%
1.79%
0.20%
1.38%
2.61%
5.47
14.30%
FY18E
4.81%
1.10%
1.75%
0.19%
1.37%
2.61%
5.47
14.26%

29
Kotak Mahindra Investments : LAS# business
Kotak Mahindra Investments

(KMI)
Total Loans
Rs 47.6bn
Calc NIM (%)

6.4%
NNPA (%)
RoAA (%)
0.06%
4.5%
Contribution to
Loans : 3.4%
PAT : 4.3%
Per share value for

KMB: Rs 12

# Loans against securities
30
KMI : LAS Business
240
730
0.1
0.50
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
0.00
2QFY14
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
3QFY16
2QFY16
4QFY15
3QFY15
2QFY15
1QFY15
1QFY16
0.1
1.00
390
360
300
560
680
710
400
470
470
250
360
170
310
4QFY14
50
0.1
7.4
0.1
15.6
1.50
0.5
100
0.2
8.6
11.7
160
230
110
210
2.0
2.00
150
23.8 23.6
20.0
2.50
0.2
30.0
32.7 34.3
NNPA (%; RHS)
1.0
30.2
2.2
200
40.2
10.0
NNPA (Rs mn)
47.6
40.0
PAT
NNPA (%) : remains comfortable
0.5
Rs bn
50.0
3QFY14
We have assigned 2.5x to KMIs core adj. networth to arrive at

a fair value of Rs 28.1bn i.e Rs 15.4 per share of KMB. After a
20% holdco discount, KMI contributes Rs 12/sh to our SOTP
Customer assets : Strong growth momentum
110
For 9MFY16, AUM grew ~58% YoY, thus leading to core and net
earnings growth of ~60% each. Asset quality was unblemished
with NNPAs at a mere 6bps. It contributed ~3.4% of total loans
and 4.3% of consolidated earnings.
2QFY14
800
700
600
500
400
300
200
100
0
140
AUM growth of ~64% (100%+ in FY15) CAGR and ~120bps rise

in calc. NIM led to ~54% rise in core earnings over FY12-15.
Further, with flat provisions, net earnings grew ~115% CAGR.
Total Income
Rs mn
10
Total Income and PAT : Quarterly trend
1QFY14
Kotak Mahindra Investments is primarily in the loan-againstsecurities (LAS) business. It also lends to several corporates and
the real estate sector. As of FY15, KMI contributed ~3.7% of
total loans and ~3.5% of consolidated profits.
1QFY14
31
KMI : Financials
Rs mn
Total Loans
YoY (%)
NII
YoY (%)
Calc. NIM
Total Income
YoY (%)
PBT
YoY (%)
PAT
YoY (%)
Rs bn
Total Loans
YoY (%)
Net Interest Income
YoY (%)
Calc. NIM (%)
PBT
YoY (%)
PAT
YoY (%)
RoAA (%)
RoAE (%)
1QFY14
8600
2QFY14
7410
3QFY14
11740
4QFY14
15550
130
200
190
270
140
10.0
210
7.9
230
7.9
310
70
180
160
240
10
110
110
160
FY15
32.1
107.6
1.74
121.4
6.83
1.58
145.7
1.06
152.9
4.47
20.20
FY16E
36.9
15.0
2.46
40.9
6.60
2.26
42.6
1.50
41.0
4.34
21.67
FY17E
42.5
15.0
2.70
10.0
6.31
2.47
9.5
1.64
9.5
4.14
19.35
FY18E
48.8
15.0
2.97
9.7
6.02
2.71
9.7
1.80
9.7
3.95
17.65
1QFY15
23830
177.1
300
130.8
6.1
360
157.1
260
271.4
170
1,600.0
2QFY15
23590
218.4
390
95.0
6.6
470
123.8
380
111.1
250
127.3
3QFY15
30200
157.2
440
131.6
6.5
470
104.3
370
131.3
240
118.2
ROAA Tree
Net Interest Income
Non Interest Income
Operating Cost
Provisions
Tax
ROAA
Leverage(x)
ROAE
4QFY15
32680
110.2
500
85.2
6.4
710
129.0
570
137.5
400
150.0
FY15
6.5%
1.0%
1.4%
0.2%
1.9%
4.0%
5.1
20.2%
1QFY16
34310
44.0
480
60.0
5.7
560
55.6
460
76.9
300
76.5
2QFY16
40240
70.6
630
61.5
6.8
680
44.7
550
44.7
360
44.0
FY16E
6.3%
0.7%
1.0%
0.2%
1.9%
3.8%
5.6
21.7%
FY17E
6.2%
0.7%
1.0%
0.2%
1.9%
3.8%
5.2
19.8%
3QFY16
47610
57.6
700
59.1
6.4
730
55.3
600
62.2
390
62.5
FY18E
6.1%
0.6%
0.9%
0.2%
1.9%
3.7%
5.0
18.4%
32
Capital Market Business
Kotak Securities (K-sec)
Avg Daily Vol.

64.8bn
Market share
2.7%
Total income
Net earnings
Contribution to
Rs 7.48bn
Rs 2.0bn
PAT : 8.3%
Per share value for

KMB: Rs 21
33
Kotak Securities (K-Sec)
3.5
100.0
Rs mn
1,200
3.0
80.0
1,000
60.0
800
40.0
600
20.0
400
0.5
200
0.0
(20.0)
3QFY16
2QFY16
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
1.0
3QFY14
1.5
2QFY14
2.0
YoY
300.0
250.0
200.0
150.0
100.0
50.0
(50.0)
(100.0)
1QFY14
2.5
PAT (LHS)
4QFY13
YoY (%) RHS
PAT : Quarterly trend
3QFY13
Total Income (Rs bn)
1QFY16
2.0
4QFY15
0.0
3QFY15
2.2
2QFY15
20.0
1QFY15
2.4
4QFY14
40.0
3QFY14
2.6
2QFY14
60.0
1QFY14
2.8
4QFY13
80.0
3QFY13
3.0
We have assigned 15x to K-Secs net earnings to arrive at

valuations of Rs 49bn i.e Rs 26.8 per share of KMB. After a
20% holdco discount, K-Sec contributes Rs 21/sh to our SOTP
Total income : Quarterly trend
Market Share (%) RHS
100.0
2QFY13
Over FY16-18E, we have factored in a total income growth of

6% CAGR with 8% volume growth. PAT growth is expected to
be a mere 4% CAGR.
Avg Daily Vol (bn)
2QFY13
Pick-up in macros, improving pipeline for IPO/OFS and

disinvestments, coupled with deeper product offering to eVYSB customers, will drive momentum.
Volume and Market share
1QFY13
One of the leading domestic brokerage houses in the country, KSec has more than 1,197 branches across 352 cities, with over
1.1mn customer ACs. It has maintained its market share in the
2.7-2.9% range over the past seven quarters. K-Sec contributed
~9.5% of consolidated earnings as of FY15.
1QFY13
34
K-Sec : Financials
K Sec (Rs mn)
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
K Sec Vol (bn)
36.92
42.48
37.2
39.46
60.53
66.21
73.78
83.72
78.13
75.93
64.81
2.2
2.4
2.3
2.4
2.9
2.7
2.8
2.9
2.7
2.7
2.7
Total Income
1470
1520
1680
1600
2230
2240
2230
2890
2500
2700
2280
YoY (%)
11.4
(1.9)
15.1
(1.8)
51.7
47.4
32.7
80.6
12.1
20.5
2.2
Brokerage (bps)
0.07
0.06
0.08
0.07
0.06
0.06
0.05
0.06
0.05
0.06
0.06
PBT
480
600
710
550
1030
1000
910
1470
1020
1200
830
YoY (%)
37.1
1.7
24.6
48.6
114.6
66.7
28.2
167.3
(1.0)
20.0
(8.8)
PAT
310
400
460
440
680
660
600
960
670
780
550
YoY (%)
34.8
21.1
238.5
119.4
65.0
30.4
118.2
(1.5)
18.2
(8.3)
Market Shares (%)
(Rs mn)
Avg. Daily Vol (bn)
YoY (%)
Total Income
YoY (%)
PBT
YoY (%)
PAT
YoY (%)
FY14
FY15
FY16E
FY17E
FY18E
39.03
71.07
76.40
80.22
89.85
10.5
82.1
7.5
5.0
12.0
6,269
9,598
10,036
10,341
11,361
8.3
53.1
4.6
3.0
9.9
2,343
4,414
4,015
4,343
4,999
24.3
88.4
(9.0)
8.2
15.1
1,602
2,896
2,634
2,849
3,279
39.9
80.8
(9.0)
8.2
15.1
35
Kotak Asset Management Company (K-AMC)
Equity AUM
Avg. AUM
Rs551bn
Rs 131bn;
~14% share
Off shore
AUM
Alternate
Funds
Rs211bn; 22%
share
Rs 56bn; 6%
share
Total income
Contribution to
Rs 780mn
PAT : 2.0%
Per share
value for
KMB: Rs 24
Data as of Dec-15; per share vale after 20% holdo discount and includes Rs 9 for Alternative and offshore funds
36
Kotak AMC
20
18
19
18
18
18
15
15
16
18
17
18
16
16
17
18
18
19
22
26
23
25
22
10
12
14
14
14
47
48
50
48
52
43
40
36
41
39
42
4QFY13
1QFY14
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
540
590
590
51
48
45
47
1QFY15
18
4QFY14
17
3QFY14
17
2QFY14
19
3QFY13
PMS
18
Total Income and PAT

Total Income
PAT
380
320
360
290
420
470
510
370
400
410
600
370
800
200
0
(200)
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
(400)
3QFY13
Over FY16-18E, we have factored ~12% CAGR in the offshore

AUMs. At 5% of FY18E AUMs of Rs 292bn, we assign valuation
of Rs 14.5bn i.e. Rs 8/share for KMB. After a 20% holdco
discount, offshore assets contributes Rs 6/sh to our SOTP
Insurance
2QFY13
We expect alternative assets business to grow at a mere 5%

CAGR over FY16-18E. We value this business at 7.5% FY18E
AUM of Rs 65.3bn to arrive at valuation of Rs 4.9bn i.e. Rs 2.7/
Share of KMB. After a 20% holdco discount, Alternative assets
contributes Rs 2/sh to our SOTP
Offshore Funds
17
230
We have valued domestic AUMs at 5% FY18E to arrive at

valuation of Rs 35.3bn i.e. Rs 19.3 /share of KMB (i.e. 2.6% of
total TP). After a 20% holdco discount, K-AMC contributes Rs
15/sh to our SOTP
Alternate assets
19
2QFY13
Equity
1QFY13
Over FY16-18E, we have factored in AUM CAGR of ~10% thus,

leading to total income growth of 7% CAGR. PAT growth is
expected to be 9% CAGR.
Debt
The e-VYSB merger with a new clientele from various

geographies will help grow AUMs for Kotak AMC.
Avg AUM
280
Of the countrys ~43 fund houses that had Rs 13.4trn average

assets under management (AAUM) at the end of Feb 2015,
Kotak ranks 8th with an AAUM size of Rs 589bn. Its market has
improved to 4.4% vs. 3.4/3.9% in Mar-15/Mar-14 and has
moved up from the 9th position in the same period.
1QFY13

37
Kotak AMC : Financials

AUM (Rs bn)
Debt (%)
Equity (%)
Alternate Assets (%)
Offshore Funds(%)
Insurance (%)
PMS (%)
Total Income (Rs mn)
YoY (%)
PBT (Rs mn)
PAT (Rs mn)
1QFY14
628
52
5
8
16
17
2
370
32.1
110
70
Rs mn
Average AUM (Rs bn)
Growth YoY
Total Income
Chg (%)
PBT
Chg (%)
PAT
Chg (%)
2QFY14
605
51
5
10
16
17
1
510
121.7
260
170
3QFY14
599
48
6
10
17
18
1
470
14.6
180
120
FY13
359
16.8
1,171
2.4
29.5
(85.4)
34.7
(75.8)
4QFY14
566
45
6
10
18
20
1
420
13.5
50
40
1QFY15
666
47
7
9
18
18
1
290
(21.6)
0
0
FY14
335
(6.8)
1,770
51.2
600.0
1,936.7
410.0
1,082.5
2QFY15
657
43
9
9
19
19
1
360
(29.4)
0
-10
FY15
417
24.3
1,370
(22.6)
(250.0)
(141.7)
(290.0)
(170.7)
3QFY15
714
40
10
9
22
18
1
320
(31.9)
-90
-10
4QFY15
806
36
12
7
26
18
1
380
(9.5)
-160
-180
FY16E
583
40.0
2,041
49.0
714.3
(385.7)
471.5
(262.6)
1QFY16
942
41
14
6
23
18
1
540
86.2
210
200
2QFY16
960
39
14
6
25
15
1
590
63.9
240
230
FY17E
641
10.0
2,181
6.9
790.6
10.7
521.8
10.7
3QFY16
957
42
14
6
22
15
0
590
84.4
130
40
FY18E
706
10.0
2,328
6.8
855.7
8.2
564.8
8.2

38
Kotak Mahindra Capital Co (KMCC)
Total Income
Rs 780mn
PAT
Rs160mn
Contribution to
PAT : ~1%
Per share value for KMB:

Re 1
39
KMCC : Investment Banking
KMCC is one of the leading Investment Banks in India. In FY15,

KMCC successfully completed 17 marquee transactions across
various product formats. On the equity side, KMCC successfully
completed two IPOs, two government disinvestments, one IPP,
four block deals and eight QIPs, raising a total of Rs 347bn, and
was ranked the no. 1 book running lead manager.
We have factored income growth of 11% CAGR and net
earnings CAGR of 6.5% over FY16-18E.
We have assigned 1x to KMCCs core networth to arrive at a
fair value of Rs 2.6bn / Rs 1.4 per share of KMB (i.e. 0.2% of
total TP). After a 20% holdco discount, KMCC contributes Re
1/sh to our SOTP
KMCC : Financials
(Rs mn)
FY14
FY15
FY16E
FY17E
FY18E
Total Income
840
890
1,024
1,100
1,265
YoY (%)
0.9
6.0
15.0
7.5
15.0
PBT
180
160
189
193
215
(23.5)
(11.1)
18.3
1.7
11.7
140
130
126
128
143
(16.2)
(7.1)
(3.1)
1.7
11.7
YoY (%)
PAT
YoY (%)
KMCC : Quarterly trend

(Rs mn)
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
220.0
120.0
260.0
250.0
120.0
110.0
130.0
520.0
210.0
290.0
280.0
Chg (%)
(4.3)
(40.0)
44.4
13.6
(45.5)
(8.3)
(50.0)
108.0
75.0
163.6
115.4
PBT
50.0
(30.0)
80.0
70.0
(60.0)
(70.0)
(60.0)
350.0
30.0
120.0
80.0
(37.5)
(150.0)
166.7
16.7
(220.0)
133.3
(175.0)
400.0
(150.0)
(271.4)
(233.3)
40.0
(20.0)
70.0
50.0
(40.0)
(70.0)
(60.0)
300.0
30.0
70.0
60.0
(33.3)
(150.0)
250.0
25.0
(200.0)
250.0
(185.7)
500.0
(175.0)
(200.0)
(200.0)
Total Income
Chg (%)
PAT
Chg (%)
40
Kotak Life Insurance Co.
Kotak Life Insurance Company (Kotak Life)
AUM
Total PAT
Solvency Ratio
Rs 147.6bn
Rs 1.74bn
3.2%
Per share value for KMB:

Rs 16
41
Kotak Life Insurance (K-life)

PAT and Growth
YoY (%, RHS)
150.0
700
600
100.0
500
400
50.0
300
200
100
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
(50.0)
3QFY13
2QFY13
We have factored APE CAGR of ~22% over FY16-18E and NBAP

margins of ~16%. We value K-Life at Rs 36.8bn (74% stake) i.e.
~Rs 20/share. After a 20% holdco discount, K-life contributes
Rs 16/sh to our SOTP
PAT (Rs mn)
800
1QFY13
Solvency Ratio (%)
AUM
AUM (Rs bn)
3.2
YoY (%, RHS)
160
140
120
100
80
60
40
20
-
30.0
3.1
25.0
20.0
3.2
3.0
3.0
2.9
15.0
3.2
3.1
3.0
3.2
3.1
3.0
2.9 2.9
3.0
10.0
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
2QFY13
3QFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2QFY13
1QFY13
1QFY13
5.0
4QFY13
Kotak Life Insurance is a 74:26 JV between KMB (and its

subsidiaries) and Old Mutual. It is one of the fastest growing life
insurance cos with market share of ~1.5% (Feb-16). K-Life
contributed ~14% to the total AUMs and ~7.5% to total profits
as on FY15.
3QFY13

42
RECOMMENDATION HISTORY
Kotak Mahindra Bank
TP
800
Date
CMP
Reco
Target
30-Mar-16
685
BUY
747
750
700
650
600
550
Mar-16
Feb-16
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
500
Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL
: Where the stock is expected to deliver (-) 10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-) 10% returns over the next 12 month period
43
Disclosure:
We, Darpin Shah, MBA, Siji Philip, MBA, and Parul Gulati, MBA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately
reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or
view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate
may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his
relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Any holding in stock No
Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or
arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty,
express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only.
Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or solicitation of
an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality,
state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HDFC Securities Ltd or its
affiliates to any registration or licensing requirement within such jurisdiction.
If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be
reproduced, distributed or published for any purposes without prior written approval of HDFC Securities Ltd .
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from
them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HDFC Securities Ltd may from time to time solicit from, or perform broking, or other services for, any
company mentioned in this mail and/or its attachments.
HDFC Securities and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies)
mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other
related information and opinions.
HDFC Securities Ltd, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action
taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or
income, etc.
HDFC Securities Ltd and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may
make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.
HDFC Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other
assignment in the past twelve months.
HDFC Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for
services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific
transaction in the normal course of business.
HDFC Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report.
Accordingly, neither HDFC Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any
specific merchant banking, investment banking or brokerage service transactions. HDFC Securities may have issued other reports that are inconsistent with and reach different conclusion from the
information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of
the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC Securities Ltd. is a SEBI Registered
Research Analyst having registration no. INH000002475.
HDFC securities
Institutional Equities
Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel,
Mumbai - 400 013
Board : +91-22-6171 7330 www.hdfcsec.com
44

Report

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Report

Caricato da

Copyright:

Formati disponibili

Kotak Mahindra Bank (KMB)

All virtue, no vice!

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Kotak Mahindra Bank (KMB) Structure

Kotak Mahindra Bank (KMB)

Subs value post 20% holding co. discount

KOTAK MAHINDRA BANK : INITIATING COVERAGE

All virtue, no vice!

A consciously low exposure to stressed sectors (8.5%, lowest

After the acquisition of e-VYSB, KMB created a bad bank, with

Private Banks : PABV vs. RoAA

1.0 1.1 1.2 1.3 1.4

KOTAK MAHINDRA BANK : INITIATING COVERAGE

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Lending Business: Kotak Mahindra Investments : At A Glance ....30

Capital Market Business: Kotak Asset Management Company : At A Glance ...36

Insurance Business - Kotak Life Insurance Co : At A Glance ...41

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Lending Business : Kotak Mahindra Bank

Kotak Mahindra Bank (KMB)

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Advances: Granular, diversified and well-picked

KMBs corporate book (~31% of loans) comprises short-term

A broader footprint, strong Tier-I (15%), diversified book,

Loan growth FY12-18E

Acquiring e-VYSB in 2QFY15 contributed significantly to KMBs

While the management guides for outpacing system loan

Mortgages form ~19% of the retail loans, while PL and CV/CE

Kotak Mahindra Bank (KMB) has a well-diversified loan book

Source: Bank, HDFC sec Inst Research

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Advances: Growth unchallenged

Consol Loan Book

YoY (%) - RHS

YoY (%) - RHS

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Consolidated aggregate (funded + non funded) exposure

Source: Bank, HDFC sec Inst Research

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Liability franchise: CASA strength to increase

Deposits : Quarterly trend

YoY (%) - RHS

With e-VYSBs network, wide suite of retail products, and

The avg. cost of SA remained lower at 5.5.% for KMB (stable

Avg. SA deposits at e-VYSB branches grew strongly over the

YoY (%) - RHS

The strong growth in SA deposits nudged up KMBs share of

The banks SA deposits grew at 41% CAGR during FY12-15 as

After the liberalisation of savings interest rates, KMB was one of

Source: Banks, HDFC sec Inst Research

Source: Bank, HDFC sec Inst Research

CASA (%) Vs. Peers

KOTAK MAHINDRA BANK : INITIATING COVERAGE

SA Growth Vs. Peers

Source: Bank, HDFC sec Inst Research

KOTAK MAHINDRA BANK : INITIATING COVERAGE

Margins to remain healthy

NIM vs. Peers

NIM : continue to remain healthy (FY12-18E)

Yield / COF And NIM Movement

KMB enjoys one of the highest NIMs (4.3%) in the industry,

Source: Banks, HDFC sec Inst Research

KOTAK MAHINDRA BANK : INITIATING COVERAGE