additionally - kotak bank pat has been increased from 7,200cr to 18,200cr in last 5 year (thats 20% cagr growth) and EPS 37.5 to 91.6 in 5 year.
P/E has been crashed to 40 to 18.9 in last 5 year
similarly, P/B has been also crashed from 5.1 to 2.7 times in 5 year
and Book Value has been increased from 264 to 654.
For me, in Bluechip companies we should only focus on valuations. Its better to not go in-deapt analysis specially for bluechip companies because management is far more experienced then us. and they have more skin in the game then us.
As per my analysis, Banks are going to see 13-15% credit growth in coming 3 years, and i believe kotak bank can give 16% cagr growth from here.
FY24A PAT - 18,200cr
FY27F PAT - 28,400cr roughly.
Current Mcap - 3,53,000 cr
Current P/E - 19
FY27 Forward P/E - 12.43
Unlike other major banks, Kotak Mahindra Bank has unlisted major subsidiaries. Ideally kmb should get better p/b value compared to all other big banks.
I liked this statement. I have seen that, when large cap / blue chips with long history of proven management capabilities trade at discount to their long term P/E or P/B, generally the valuations revert to the mean over a period of 3-5 years. It takes some time and tests investor patience, but eventually it happens.
Many investors (including me) spend lot of time in finding negatives about such large cap stocks and often hesitate to invest or invest 50% or 60% of full amounts, often to find ourselves wrong after 3 to 5 years.
We can check this ourself by looking at stock price charts of ITC, BAJAJ AUTO, COAL INDIA in the recent past 5 years.
Having said this, it is also necessary to book profits after those 3-5 years, once the undervaluation is converted to overvaluation.
yes, Look at Bank Nifty EPS growth, it grows from 450 to 3450 in last 5 years (it’s 50% cagr) growth.
but bank nifty has 28,000 to 50,000 (not even 2x).
Yes. My point was to look at Bank Nifty EPS growth in last 5 years as 50% CAGR can be wrong. This CAGR is optical illusion due to suppressed nature of profits.
