Reviews

In this edition, we have reviewed Kotak Mahindra Bank and Divis Laboratories . We suggest our reader-investors to HOLD in Kotak Mahindra Bank & Divis Laboratories

We had recommended Kotak Mahindra Bank in Volume 35, Issue No. 2, dated December 10 - December 23, 2019, under the ‘Cover Story’ segment. The recommended price for the stock was Rs1,713.05. We had recommended the stock on the basis of its stability and positive performance.

Kotak Mahindra Bank Limited is an Indian private sector bank which offers banking products and financial services for corporate and retail customers. On the quarterly front, the net interest earned by the bank in the fourth quarter of FY21 came in at Rs7,951.77 crore as compared to Rs8,434.13 crore in the corresponding quarter of the previous fiscal, a decrease of 5.72 per cent. The total income in Q4FY21 was Rs16,175.87 crore, an increase of 33.85 per cent from Rs12,084.71 crore in Q4FY20. The profit after tax rose by 35.9 per cent to reach Rs2,589.32 crore in Q4FY21 from Rs1,905.18 crore in Q4FY20.

Net interest earned by the bank in FY21 came in at Rs32,819.83 crore, a decrease of 1.95 per cent from Rs33,474.16 crore in FY20. The total income earned by the bank in FY21 was Rs56,703.73 crore, an increase of 12.73 per cent from Rs50,299.69 crore earned in the previous fiscal. The profit after tax in FY21 increased by 16.25 per cent to reach Rs9,990.20 crore as against Rs8,593.36 in FY20. KMB holds a good place across metrics with a best-in-class liability franchise, prudent underwriting, strong capital position and adequate margin levers. Higher customer acquisition.deepening relationships and cross-selling are more focused on by the management of company.

On the digitalisation front, the company launched universal video KYC platform made for assets customer. Also, it launched an end to end digital journey for consumer finance loans for New to Bank customers – an industry first. Hence, we recommend HOLD.

We had recommended Divis Laboratories in Volume 36, Issue No. 2, dated December 8 - December 21, 2020, under the ‘Cover Story’ segment. The recommended price for the stock was Rs3,627.4. We recommended the stock on the basis of its expected strong financial numbers and ratios. Divis Laboratories Limited is an Indian multinational pharmaceuticals company and producer of active pharmaceutical ingredients which manufacture, and custom synthesize generic APIs, intermediates and nutraceutical ingredients. The financial performance of the company indicates that on a consolidated quarterly basis the net sales and other operating income was recorded at Rs1,788.19 crore in Q4FY21 as compared to Rs1,389.71 crore in Q4FY20, giving a rise of 28.67 per cent. The operating profit rose by 41.94 per cent from Rs521.18 crore in Q4FY20 to Rs739.78 crore in Q4FY21.

The net profit improved by 29.31 per cent in the quarter which registered at Rs502.02 crore in Q4FY21 as compared to net profit of Rs388.23 crore in Q4FY20. On the annual front the net sales and operating income rose by 4.54 per cent from Rs5,394.42 crore in FY20 to Rs6,969.40 crore in FY21. The operating profit rose by 45.27 per cent in FY21 as compared to FY20. The net profit on an annual basis surged 44.15 per cent, recording at Rs1,984.29 crore in FY21 as compared to Rs1,376.54 crore in FY20. Recently, Divis Laboratories announced that it has been selected by Merck, a US-based drug major, as an authorised manufacturer for the active pharmaceutical ingredient (API) of Molnupiravir (MK-4482). Merck has inked an agreement with the US’ government for supply of Molnupiravir. Hence, having optimistic views on growth prospects of the company, we recommend HOLD.

(Closing price as of June 24, 2021)