KOTAKBANK - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.2
| Stock Code | KOTAKBANK | Market Cap | 4,05,064 Cr. | Current Price | 407 ₹ | High / Low | 460 ₹ |
| Stock P/E | 29.9 | Book Value | 126 ₹ | Dividend Yield | 0.12 % | ROCE | 7.45 % |
| ROE | 15.4 % | Face Value | 1.00 ₹ | DMA 50 | 424 ₹ | DMA 200 | 415 ₹ |
| Chg in FII Hold | -0.39 % | Chg in DII Hold | 0.86 % | PAT Qtr | 3,446 Cr. | PAT Prev Qtr | 3,253 Cr. |
| RSI | 33.7 | MACD | -5.32 | Volume | 92,18,452 | Avg Vol 1Wk | 2,53,11,604 |
| Low price | 375 ₹ | High price | 460 ₹ | PEG Ratio | 1.23 | Debt to equity | 4.42 |
| 52w Index | 37.4 % | Qtr Profit Var | 4.28 % | EPS | 13.6 ₹ | Industry PE | 15.8 |
📊 Financials: Kotak Mahindra Bank demonstrates strong profitability with ROE at 15.4%, though ROCE at 7.45% reflects modest capital efficiency. Debt-to-equity ratio of 4.42 is typical for banks, given their lending-driven model, but highlights reliance on leverage. Quarterly PAT improved from 3,253 Cr. to 3,446 Cr. (+4.28%), showing steady earnings growth. Cash flows remain stable, supported by consistent interest income and diversified operations.
💹 Valuation: Current P/E of 29.9 is significantly higher than industry average (15.8), suggesting premium valuation. P/B ratio (~3.2) is moderate, while PEG ratio of 1.23 indicates balanced growth-adjusted valuation. Intrinsic value analysis suggests entry opportunities around 390–405 ₹, offering margin of safety compared to current price (407 ₹).
🏢 Business Model & Advantage: Kotak Mahindra Bank operates as a leading private sector bank with diversified offerings across retail, corporate, and investment banking. Its competitive advantage lies in strong brand recognition, diversified loan portfolio, and robust digital banking infrastructure. Market cap of 4,05,064 Cr. positions it as a large-cap banking leader with resilience and growth potential.
📈 Entry Zone & Holding Guidance: Attractive entry zone: 390–405 ₹. Long-term investors may hold given strong fundamentals, steady earnings growth, and sector tailwinds. Technical indicators (RSI 33.7, MACD negative) show near-term weakness, but long-term outlook remains positive.
Positive
- Strong ROE (15.4%) highlights profitability.
- Quarterly PAT growth (+4.28%) indicates steady earnings momentum.
- DII holding increased (+0.86%), showing domestic institutional confidence.
- Large-cap positioning with diversified banking operations.
Limitation
- ROCE (7.45%) reflects modest capital efficiency.
- High P/E (29.9) compared to industry average (15.8) suggests overvaluation.
- Debt-to-equity ratio of 4.42 highlights leverage risk typical of banks.
- Dividend yield of 0.12% is very low, limiting income appeal.
- Stock trading below DMA 50 (424 ₹) signals short-term weakness.
Company Negative News
- Decline in FII holding (-0.39%) reflects reduced foreign investor confidence.
- Weak technical indicators (RSI 33.7, MACD -5.32) show bearish momentum.
Company Positive News
- Quarterly PAT growth from 3,253 Cr. to 3,446 Cr. highlights earnings resilience.
- DII inflows (+0.86%) show strong domestic institutional support.
Industry
- Industry P/E at 15.8 indicates moderate valuation levels.
- Banking sector benefits from credit growth and rising retail demand.
- Private banks with diversified portfolios and digital infrastructure hold competitive advantage.
Conclusion
⚖️ Kotak Mahindra Bank demonstrates solid fundamentals with strong profitability, steady earnings growth, and institutional support. Despite premium valuation and modest ROCE, the company remains a resilient large-cap banking player. Entry around 390–405 ₹ is recommended for long-term investors, with cautious monitoring of valuation and technical trends.