Friends, there was a news that Kotak Mahindra Bank can acquire IndusInd Bank or is going to do it
how true was the news or how false and who will benefit from this acquisition
and who will face losses?
as an investor, after this acquisition, if it happens, whether you should invest or not
what should be your investment strategy in such cases, we will be answering these questions in today's video
that's why I ask you to watch this video till the end!
I, Jagdeep Singh, welcome you to Groww YouTube channel
let's start today's video
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let's now go to the news where it was stated that Kotak Mahindra Bank might acquire IndusInd Bank
it was also said in the news that the acquisition discussion has been started and first round of discussion is done
it was in the news so I mentioned here, but later, the promoters of IndusInd Bank stated that all these news are baseless
they don't have any motive that Kotak Mahindra should acquire IndusInd Bank
but suppose if it would have been acquired then who would have benefitted the most from it?
if in the future it gets acquired, then who will benefit the most and if we see some small numbers here
if I count total branches in India then Kotak Mahindra has 1500 branches
IndusInd Bank has more than 2000 branches
even if Kotak Mahindra acquires IndusInd then, it is just speculation whatever I am saying and not a fact
that it will acquire or not but then also assume a hypothetical situation if it acquires
the Kotak Mahindra Bank will benefit the most from it
as their reach would be increasing by 80-85% all over India
apart from this, if we talk about the complete banking sector
every bank is targetting how to grow its loan book in the retail sector
if i take the numbers of some of the last years' or growth in some of the last quarters
IndusInd Bank's market capitalization has come down by 60%
which is a fact but If we see the growth in the retail side
IndusInd bank's growth in the retail side is better than Kotak Mahindra Bank
if we talk about numbers or reach
so from here, we can understand that Kotak Mahindra bank acquisition makes sense and the other bank is saying
that all these rumours in the market are malicious and they deny it completely
which means speculating here the outcomes of this will be totally wrong
we can do an insightful discussion by comparing the numbers of both the companies
we are not saying what will happen when it gets acquired but
we will discuss in details what are the numbers for both the companies
how both the banks perform
if we talk about the present-day banking scenario, bad debt is prevailing in the banking sector
because some regulations related to NPS is coming and also, there is some hearing going on regarding this in the Supreme Court
which can impact the banks in some or the other way
so, in these times, what are the parameters, if you are thinking to invest
in Kotak Mahindra Bank or IndusInd Bank, then you should know them in detail
also, Kotak Mahindra Bank had its second quarterly result which we will talk about in detail
to check how Kotak Mahindra Bank performed in the recent quarter
I forgot to say one thing to you
If in case there is a merger of these banks in a hypothetical situation, it will become the 2nd largest bank in India after HDFC
if only it gets acquired
and the promoters have said that the news of acquisition is malicious and there no truth in that
so, I won't discuss that but this was the number which I wanted to tell you
let's quickly talk about some important parameters of Kotak Mahindra Bank and see how it has performed in the last few months
so, if we talk about recent quarterly result then I would talk about CASA ratio - Current Account and Saving Account
which tells you how much money is in Bank's current account and saving account
and which is available at the lowest cost to the bank
if I talk about the CASA ratio of Kotak Mahindra bank, it is counted the highest among top 5-6 private banks in India
in terms of CASA ratio, Kotak Mahindra's CASA ratio is 57% in the last quarter result
if we compare it to the same quarter of the last financial year, their CASA ratio used to be around 53%
which means in adverse timings also, the bank has improved CASA ratio and if I compare it with other banks such as
HDFC Bank, ICICI and Axis bank which are the top banks of India
compared to them, it has a great CASA ratio
and it is still maintained by Kotak Mahindra Bank
now let's talk about Net Interest Income; how much net interest income bank has earned in the last quarter
Kotak Mahindra Bank has reported a net interest income of Rs. 3900 Cr
if compared to the same quarter of the last financial year, it reported Rs. 3300 Cr
which means in the comparison also, we can see a good growth
there is one important thing which how much is the net interest margin
which means if the bank is getting money at 3% and it is providing it at 6%, what is the margin in between this
the net interest margin of Kotak Mahindra Bank is 4.52% and compared to last year's same quarter, it used to be around 4.6%
which means it is almost constant, a little bit dip we can see though
talking about profit after tax, the same quarter of the last financial year, it was Rs. 1700 Cr
which has been improved and currently is Rs. 2100 Cr
which means after comparison, the bank has performed a little bit better
now let's go to the parameter which is the most important parameter of Banking Industry
NPA- Non-Performing Asset
Kotak Mahindra's NPA has come down as in the last financial year, it used to be around 0.85%
which has come down to currently 0.65%
so the number is very less which means their asset quality in the last quarter has increased, which is a positive point for Kotak Mahindra
you must have liked that it's NPA has decreased from 0.85% to 0.65%
just like I told in the case of Yes Bank; if you haven't watched the video, the description is given below
Supreme court's decision came which said the if Banks don't want to recognize some loans in 90 days window in NPA then they can do it
for this particular quarter
that's why I said that in the future NPS of the banks might increase as they have to recognize sometime in the future
if you see the Kotak Mahindra's investor presentation, they have said it clearly that if they remove supreme court order impact from here
then their net NPA would have been 0.70% instead of 0.64% which means the impact of NPA is decreased which may be recognized in the coming days
that, time will only tell, i won't speculate about that
now you know about the net NPA, you would want to know what's the Gross NPA of the company
which is how much is their Non Performing assets
so, Kotak Mahindra Bank used to have 2.32% NPA in the same quarter of the last financial year
which is now currently increased to 2.5%
which means their gross NPA is increased and Net NPA is decreased
there is a simple reason for that - they have done a lot provisioning
which means whatever NPAs they thought won't come back, they have booked it as loss in their profit and loss statement
so that their net NPAis in line
okay friends, let me tell you a very interesting and insightful thing
in the case of Kotak Mahindra, whatever loan and advances they have given is in which sectors
which is very important for you to know as an investor
because whichever doesn't provide money, is considered as NPA for banks
it's very important for you to know where have the banks lent their money and what are the chances of it being a default
is very important and that's why I am sharing this information
as the screen shows, this information I have taken from Kotak Mahindra's investor presentation
which tells you the break of the the bank which have assets of 2,80,000 Cr
if we see corporate, they have 26% share
after that they have their biggest share is in the case of Home loan
which is 22%
and the chances of getting default is less as the loan is backed with an asset
which is a positive thing which means that the bank wants to get into retail and apart from that
in agriculture, they have 10%
you can also check tractor finanance and other things as well
where the bank has provided their loan book
where they have lent their money
Analysis of Kotak Mahindra Share doesn't stop here because
Kotak Mahindra Shares have a lot of other business and the value depends on them as well
as I have told you, share's value is derived by its business
and the number of business under that defines that value and is derived from that
Kotak Mahindra has a business of AMC along with Banking
and they Life Insurance business and Kotak Securities is also a part of it
so, let's see their result in detail but this was not my objective to discuss it today
because if we start discussing it, the video will become very long
but if you want to invest in this company then you should know about their business model
such as how much revenue they earn from there and what will be the margin in the future
and how much growth this bank or this share is expecting there
and after discussing and analyzing this and you can take an investment decision later
Now. let's talk about IndusInd Bank so that I can explain this video's context clearly
and I have explained it in the starting as well
IndusInd Bank has a market capitalziation of Rs. 46,000 Cr
It has a good reach and its ATM and branches are well spread across India
So, they have a market cap of Rs. 46,000 Cr but did you know that they have lost more than 50% of their market cap in the last year
which means its share price has come down a lot in the last few months
Talking about Revenue, IndusInd Bank has made a good revenue and great result and their topline hasn't gone down
in the last few months
So, the Net NPA of IndusInd Bank in June quarter was around 0.81%
and the Gross NPA was around 2.5% in June 2020
which means the NPA of this bank is not that bad if compared to other banks
on the contrary, its NPA is very inline if we compare it with other banks in a proper manner
so this was today's video in which I wanted to explain about these two banks and I didn't want that you take an investment decision based on a news
I wanted to explain that investment decision should be backed with proper research, proper fact
and what is the growth prospect in the coming days should be the basis of your investment
such news come and go in the market; earlier also there were such news and there will be in the future as well
what's important for you is you shouldn't lose focus and select the right company for you like these types of news may be right or fake as well
in this case, promoters of IndusInd had already said that this news is baseless and the time will only tell what's right and wrong
take an investment decision on that basis and this news can act as an input for your research
but can't be the sole information on the basis of which you make your investment
so, I hope you have liked today's video and now let's discuss in the 2nd part of the video
some of the questions that were asked by our viewers in the last video's comment section
first question is asked by Shubhajit and the question is why the market capitalization is different for NSE and BSE
so, friends, what is the formula for Market Capitalization?
no. of shares X market price
as you know NSE and BSE are two different exchanges where there can be a little bit delta in the price
for example, a share's price in NSE is Rs. 10 and BSE has its price as Rs. 9.80
which means it has a delta of 20 paise
so if at one place there are 100 shares of that company then its market capitalization will be 1000
and the other place will have 980 as its market cap
I hope you have got your answer through this example
normally, the delta of a share price is very less in both of them
but if there's a slight delta then the market cap will be different as it has a different formula
which is simple, no. of shares X market price
so, the more is the market price, the more is the market capitalization
2nd question is asked by Murlidhar which is 'why the intraday profit is not shown in my wallet?'
as you might be aware of the recent regulation regarding trading that every broker needs to collect an upfront margin
so, friends whatever profit you earn in Intraday is not clear as the settlement happens after 2 days
practically that money is transferred to your account after 2 days
then you can withdraw it
but in the case of Groww, if you earn a profit in Intraday, you cannot use that on the same day to invest somewhere
but, next day morning, you will have it in your wallet
which you can use in the next investments
so, I hope you got your answer in a simple and easy way
if you still have doubt, you can comment below and ask us
so, with this, i will end today's video and if you have liked the video, do comment
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