Kotak Mahindra Bank share price falls over 2% after Q1 result; Should you buy, hold or sell the stock?

livemint.com:

₹1,914.30 apiece on the BSE. The private lender Kotak Mahindra Bank reported a net profit of ₹3,452 crore in Q1FY24, up 67% from ₹2,071 crore in Q1FY23.  On a consolidated basis, the bank’s net profit rose 50.62% YoY to ₹4,150.19 crore  Net Interest Income (NII) during the April-June quarter increased to ₹6,234 crore  from ₹4,697 crore in Q1FY23, up 33% YoY. Net Interest Margin (NIM) was 5.57% for Q1FY24.

Here's what brokerages have to say on the stock: Kotak Mahindra Bank delivered a healthy quarter with steady revenue growth and stable asset quality. NIM contracted due to the rising cost of deposits but was on expected lines. Asset quality remained steady, aided by healthy recoveries, while the restructured book moderated to 20 bps of loans, the brokerage said.  The brokerage raised its earnings estimates by 7%/5% for FY24/25 and expects Kotak Mahindra Bank to deliver RoA/RoE of 2.4%/14.3% in FY25.  It reiterated ‘Neutral’ call with a target price of ₹2,170 per share.

ICICI Securities noted that there was a substantial rise in slippages and credit costs, which was partly due to higher share of unsecured loans, which are now at 10.7% vs 7.9% YoY.  “For FY24E-FY25E, we maintain our loan growth estimates at ~18% CAGR and credit cost estimate at 50-60 bps. However, we raise our FY24E/FY25E PAT by 2-3% on higher other income. We estimate 2.2% / 1.9% RoAs for FY24E / FY25E respectively," ICICI Securities said.

The brokerage maintained ‘Hold’ rating and increased the target price to ₹2,000 per share from ₹1,900 earlier. Upside risk is higher than expected growth and downside risk is sharp deterioration in asset quality, it said. The brokerage said that the bank’s asset quality was impacted by a seasonal uptick in slippages