Prabhudas Lilladher's research report on Kotak Mahindra Bank
KMB Kotak Bank (KMB) has acquired Deutsche Bank’s (DBAG) retail banking, private banking and wealth management business in India as a going concern on a slump sale basis. KMB to pay in cash (a) total purchase consideration of INR 2.82bn and (b) amount of asset less liabilities at closing, subject to agreed contractual adjustments. Business comprises approx. INR 290bn in loans, INR 160bn in deposits and INR 105bn of AuM. Customers are 150,000 serviced by 1,000 employees that will join KMB as part of this transaction. We expect this acquisition to be core RoA/RoE accretive and assuming no run-down, the acquired portfolio could give a core RoA of 1.9-2.1% and a core RoE of 13-15%.
Outlook
Hence this may lead to ~3.0% increase in core PAT for FY28 while core RoE would enhance to 12.5-13.0% from 11.3%. Stock is valued at 1.4x on FY28E core ABV; we maintain our positive stance with ‘BUY’ rating and TP of INR 480.
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Kotak Mahindra Bank - 0107026 - prabhu