Financials · investment research
Kotak Mahindra Bank
KOTAKBANK
Verdict
WATCHLIST
low confidence · 3-5 years
Composite score
70/100
Weighted across all eight pillars
Business quality
77/100
Moat, returns, balance sheet, cash, management
Valuation score
19/100
At 65.7x against a sector median of 46.9x, the price embeds roughly 48% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
Good business, wrong price. Track it and wait for a better entry.
WHY
- • Profitability & returns scores 94/100 (deteriorating) — ROCE was 32.3% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- • Cash conversion scores 88/100 (stable) — Reported profit is backed by operating cash.
- • Valuation scores 19/100 (stable) — At 65.7x against a sector median of 46.9x, the price embeds roughly 48% earnings growth. Anything less has to come out of the multiple.
- • Balance sheet scores 72/100 (deteriorating) — Leverage is serviceable from current cash generation.
WHERE
Financials · Large cap · position sized to at most 0% of an equity portfolio.
WHEN
Revisit if the price approaches ₹5,901 or earnings catch up with the multiple.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 25% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹5,901 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Valuation risk — The multiple already discounts a lot of future growth.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check Repo rate — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Kotak Mahindra Bank is a competitively exposed financials business compounding revenue at 7.6% and profit at 19.3%, earning 28.9% on capital. Quality scores 77/100 and valuation 19/100 at 65.7x. The decision is therefore watchlist with low confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Kotak Mahindra Bank operates in the Indian financials sector with a large-cap footprint and a listed market value of about ₹350k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Net interest margin and credit growth
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Depreciation from recent capex
- • Distribution and marketing spend
Moat · 51/100
Brand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
Segment mix
Growth 28.8% · margin 19.7% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 8.1% · margin 29% — Growing broadly in line with the overall business.
Growth -5.3% · margin 31.9% — Flat to declining; drags the consolidated growth rate.
Growth -5.4% · margin 8.7% — Flat to declining; drags the consolidated growth rate.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
71/100Trend: improving · weight 14%
- MoatBrand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
- Segment concentrationRetail lending is 18.3% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin33.0%
Margin moved from 22.0% to 33.0% year on year.
Profitability & returns
94/100Trend: deteriorating · weight 16%
- ROCE28.9%
ROCE was 32.3% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE26.3%
Return on equity after leverage — read alongside debt levels.
- Net margin18.5%
Share of every rupee of revenue that reaches reported profit.
Growth quality
61/100Trend: improving · weight 15%
- Revenue CAGR (4y)7.6%
Top-line compounding over the reported history.
- Profit CAGR (4y)19.3%
Profit is compounding faster than revenue — operating leverage is working.
- Growth sourceCapex-led (organic)
Capex is 14.0% of revenue this year.
Balance sheet
72/100Trend: deteriorating · weight 12%
- Debt / EBITDA0.93x
Leverage is serviceable from current cash generation.
- Debt / equity0.47x
Capital structure relative to shareholder funds.
- Working capital91 days
Long cycle: each rupee of growth locks up more cash.
Cash conversion
88/100Trend: stable · weight 13%
- OCF / PAT113%
Reported profit is backed by operating cash.
- Free cash flow₹10,776 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
60/100Trend: improving · weight 14%
- Guidance delivery53% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding31.4% (+1.73 y/y)
Promoter ownership is stable or rising.
- PledgeNo pledge
No pledge disclosed in the sample data.
- Institutional flowFII -0.76 · DII +1.83
Direction of institutional ownership over the last year.
- Capital allocationMost operating cash is reinvested into the core …
Most operating cash is reinvested into the core business.
Industry & macro
68/100Trend: improving · weight 8%
- Demand trendimproving
Financials (India) demand is improving.
- StructureConsolidated
Consolidated — a few large players hold most of the profit pool.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversRepo rate, Credit growth, Asset quality cycle
Variables that move the earnings base regardless of company execution.
Valuation
19/100Trend: stable · weight 8%
- P/E vs sector65.7x vs 46.9x
At 65.7x against a sector median of 46.9x, the price embeds roughly 48% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted3.40 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield3.08%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹1.17 L Cr | ₹21,000 Cr | ₹14,280 Cr | ₹14,994 Cr | ₹4,494 Cr | 32.8% |
| FY2023 | ₹1.27 L Cr | ₹31,661 Cr | ₹16,780 Cr | ₹17,955 Cr | ₹7,824 Cr | 25.5% |
| FY2024 | ₹1.37 L Cr | ₹17,760 Cr | ₹11,366 Cr | ₹12,389 Cr | ₹4,192 Cr | 32% |
| FY2025 | ₹1.47 L Cr | ₹32,250 Cr | ₹16,770 Cr | ₹18,615 Cr | ₹6,888 Cr | 32.3% |
| FY2026 | ₹1.57 L Cr | ₹51,667 Cr | ₹28,934 Cr | ₹32,695 Cr | ₹10,776 Cr | 28.9% |
- ⚠ Working capital cycle is long; growth consumes cash.
Ownership & management
Who owns it, and have they delivered?
Promoter
31.4%
+1.73 y/y
Pledge
None
No disclosed pledge
FII
28.3%
-0.76 y/y
DII
16.8%
+1.83 y/y
Guidance delivered in 53% of the last eight quarters; average leadership tenure 3 years.
Most operating cash is reinvested into the core business.
No governance flags raised by the sample dataset.
Industry & macro context
Financials (India)
Demand trend
improving
Cyclicality
medium
Competition
high
Regulatory pressure
medium
Consolidated — a few large players hold most of the profit pool.
Macro drivers: Repo rate · Credit growth · Asset quality cycle
Valuation
expensive versus the sector
P/E
65.7x
Sector median P/E
46.9x
P/B
11.31x
Earnings yield
1.52%
FCF yield
3.08%
PE / growth
3.4
Estimated fair-value band ₹5,901 – ₹7,540 , built on FY2026 EPS of ₹145.7. Gap to the current price: +281.4%. Ranges are a modelling output, not a target price.
At 65.7x against a sector median of 46.9x, the price embeds roughly 48% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Valuation riskhigh
The multiple already discounts a lot of future growth.
Monitor: Any quarter where growth slows below the implied rate.
- Accounting qualitymedium
Working capital cycle is long; growth consumes cash.
Monitor: Cash-flow statement versus P&L each quarter.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 28.9% | stays above 26% | falls for two consecutive years |
| Cash conversion | 113% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 7.6% CAGR | tracks the 48% priced in | slows for two quarters with no margin offset |
| Promoter holding | 31.4% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 58/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.
- • Accounting flags reduce the reliability of the reported profit base.