X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
KMFL: Competition hits growth - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • May 13, 2002

    KMFL: Competition hits growth

    Kotak Mahindra Finance (KMFL) continued to report decline in income from operations in the fourth quarter. However, lower provisions and interest cost saved the day for the company with a 55% rise in earnings. Increasing competition from banks in personal finance business impacted the company's revenue growth during the year.

    (Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
    Income from Operations 488 451 -7.7% 1,813 1,703 -6.1%
    Other Income 257 135 -47.6% 623 498 -20.0%
    Interest & depreciation 260 242 -7.1% 1,096 923 -15.8%
    Net interest income 228 209 -8.4% 717 780 8.7%
    Other Expenses 121 114 -5.3% 432 394 -8.8%
    Operating Profit 107 94 -11.9% 285 386 35.3%
    Operating Profit Margin (%) 21.9% 20.9%   15.7% 22.7%  
    Provisions and Contingencies 55 -12 -122.2% 77 131 69.2%
    Profit before Tax 309 241 -21.9% 831 753 -9.3%
    Tax 180 42 -76.9% 335 202 -39.9%
    Profit after Tax/(Loss) 129 200 55.2% 496 552 11.3%
    Net Profit Margin (%) 26.3% 44.3%   27.4% 32.4%  
    No. of Shares (m) 59.2 59.2   59.2 59.2  
    Diluted Earnings per share* 8.7 13.5   8.4 9.3  
    P/E Ratio   12.0     17.4  
    *(annualised)            

    In FY02, KMFL's financing portfolio grew in excess of 50% over the previous year. Out of this, the commercial vehicle financing business was up 90% over the previous year with new disbursements crossing Rs 5 bn. The company's revenues are however, declining since the last two years. This could be due to the fact that interest rates have declined significantly and competition has increased substantially, which could have impacted revenue growth.

    The company managed to improve operating margins by nearly 700 basis points to 23% on the back of stiff cost control measures and a 18% reduction in interest cost. Its cost to income ratio however, declined marginally to 31% from 32% in the previous year, as its other income declined sharply by 20%. In FY02, KMFL's dividend income from subsidiaries dropped by 78% to Rs 37 m. Its investments in group companies accounted for 28% of revenues and 45% of pre tax profits.

    Following the Reserve Bank of India’s in-principle approval, the company has initiated the necessary steps towards conversion into a bank. It expects to draw significant synergies with its existing personal finance business in terms of lower cost of funds and more cross selling opportunities.

    At the current market price of Rs 162, KMFL is trading on a P/E of 17x and price to book value ratio of 1.6x FY02 earnings. The stock has witnessed a sharp run-up in the last two months, rising from the level of about Rs 50 in December 2001. This was after the company had been given approval by the RBI to convert into a bank. KMFL's current valuations are in line with the second rung private banking stocks. Going forward, the company's ability to successfully leverage on the banking model would determine its valuations.

     

     

    Equitymaster requests your view! Post a comment on "KMFL: Competition hits growth". Click here!

      
     

    More Views on News

    HDFC: Red Flag in Developer Loans (Quarterly Results Update - Detailed)

    Aug 10, 2017

    HDFC starts FY18 on robust loan growth but asset quality slips on increased exposure to developer loans.

    Shriram Trans Fin: FY17 Ends on a Tepid Note due to Regulatory Headwinds (Quarterly Results Update - Detailed)

    Jun 22, 2017

    Demonetisation led slowdown coupled with shift to stringent bad loan norms keep Shriram Transport Finance on a slow wicket.

    Power Finance Corp: Alignment with RBI Norms Knocks Down FY17 Earnings (Quarterly Results Update - Detailed)

    Jun 14, 2017

    Power Finance Corporation earnings hit by RBI mandated higher provision on state government power generation projects where the recovery continues to be 100%.

    IDFC: Ends FY17 on a Healthy Note (Quarterly Results Update - Detailed)

    May 30, 2017

    IDFC regains its tempo in FY17 post the demerger of the banking business.

    HDFC: Conservative Provisioning tempers down FY17 earnings (Quarterly Results Update - Detailed)

    May 9, 2017

    HDFC ends FY17 on a tepid note as it remains conservative on the asset quality front.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    KOTAK MAH. BANK SHARE PRICE


    Aug 18, 2017 (Close)

    TRACK KOTAK MAH. BANK

    • Track your investment in KOTAK MAH. BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON KOTAK MAH. BANK

    KOTAK MAH. BANK 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE KOTAK MAH. BANK WITH

    MARKET STATS