KOTAK Mahindra BANK analysis

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Industry Overview : Banking is different from other businesses. In banking, Raw material and Final output is same. Money. High level of borrowed funds are not good for other types of businesses. In banking it is necessary to borrow. Banking gives the access to nearly all levels of people in society. Hardly any other businesses can do that. Use of public money is very big in banking business with respect to other businesses. Hardlany other businesses achieve the status TO BIG TO FAIL. It’s easy for banks to become that much big. Real asset for any bank is mainly Their brand and Human resources. For others Manufacturing plants or machines are important assets. Banks play key role in Economy as giving loans or financing Infrastructure or housing is important for Govt for that banks may play key Role. For Increasing the business of Banking network of branches is important though in today’s Application era, we don’t need big and Large network. But whatever is the network, that helps many businesses. Like when I need to go for IPO, I prefer KOTAK securities, SBi Cap, Axis Capital rather than Other Investment banker. Because they can use the Bank branch network for receiving payment. Banks are helping general public to invest the money and so Channelising the savings. But the biggest thing a bank is doing is keeping the flow in Economy. Without a bank its impossible for Govt to make it. Banking also helping to make records of income. As we are living in cashless payment era, bank account is must.

Company Overview : Kotak Mahindra BANK started as Kotak Mahindra Finance with the bill discount business. 1990-91 started financing passenger cars, Leasing and Hire purchase and also established investment banking. In that business the company makes partnership with Goldman Sachs and Ford credit for investment banking and vehicle Loan. Even before receiving the banking licence they have Mutual fund business. It was the first Non Banking Finance Company to become Bank. In 2003, RBI Give Them Banking licence. Today the Bank is one of the fastest growing Bank and one of the most admired financial institution in India.

The bank has over 323 branches and a customer account base of over 2.7 million all over the Nation including Tier ii and rural areas. Which is big strength for Any bank. Right now the bank is operating in insurance, Mutual funds, stock broking, commercial banking. In commercial banking the company is operating in both retail and wholesale (corporate) Banking. The bank also operating in overseas market and providing its Customers and Investors overseas services. The bank has presence in New York, London, Mauritius, Dubai, Singapore.

The bank offers complete financial solutions for infinite needs of all individual and non–individual customers depending on the customer’s need – delivered through a state of the art technology platform. Investment products like Mutual Funds, Life Insurance, retailing of gold coins and bars etc are also offered.

Savings account and current account which are important for Any Bank playing important role to Kotak Mahindra bank also. The bank has more than one option through which Bank acquired low cost funds.

The Bank also offer Depositories service through which customers can hold Equity shares, Debt, gold and other Bond in electronic format.

The mobile application of the bank is very useful and one for all. It is doing so many things from booking flights and hotels to paying mobile bill and DTH recharge.

Apart from Phone banking and Internet banking, the Bank offers convenient banking facility through Mobile banking, SMS services, Netc@rd, Home banking and BillPay facility among others.

For the business community, the bank offer comprehensive business solutions that include the Current Account, Trade Services, Cash Management Service and Credit Facilities. The bank’s wholesale banking products offer business banking solutions for long–term investments and working capital needs, advice on mergers and acquisitions and equipment financing. To meet special needs of the rural market, the bank has dedicated business offerings for agricultural financing and infrastructure. Its Agriculture Finance division delivers customised products for capital financing and equipment financing needs of our rural customers.

Kotak Mahindra Bank addresses the entire spectrum of financial needs of Non–Resident Indians. The bank has 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 and investment products and services for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs). Their Online Account Opening facility and Live Chat service helps to get in touch at the comfort of homes and at the convenience. These offerings are specifically designed to suit the overseas Indian’s personal financial needs and give the global Indians a near to home feel.

SHAREHOLDING

 

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Financials and Ratios : 

 2010-112011-122012-132013-142014-152015-16
Loan Book29329.3139079.2348468.9853027.6366160.71118665.30
Net Interest Margin4.123.823.834.243.983.58
ROE11.9713.5914.3712.2313.198.72
ROA1.601.651.621.711.761.08
Efficiency Ratio41.4433.5932.6535.5737.3348.08
Tier 1 Capital18%16%15%18%16%15%
Net NPA to Loan Book1%1%1%1%1%1%
CASA Ratio303229323638
Book value92.74107.75126.77159.46183.13130.63
EPS11.2814.6118.2419.5924.1411.40
Dividend per Share0.50.60.70.80.90.5

Future Prospects : Kotak Mahindra bank is not only bank but on consolidated level, it is an investment Bank, Asset Management Company, Insurance company, trustee company and many other businesses. It is the company behind many successful IPO so that is one factor which increasing future potential.

The penetration of financial services in India is very Low. It is expected that it will grow in upcoming years. For All that Kotak Mahindra bank is well placed. Only exception is the bank is mainly concentrating HNI like customers.

Investment banking business is taking of in India and as Kotak Mahindra bank is one of the leading in the segment, it is expected that investment in the Bank will make good wealth.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter