Hello,

The behavior observed is expected.
The DateTimePicker component exposes a format option that specifies the format, which is used to format the value of the DateTimePicker displayed in the input. The format also will be used to parse the input. However, there is a dedicated timeFormat option that specifies the format, which is used to format the values in the time drop-down list:

$("#datetimepicker").kendoDateTimePicker({
        value: new Date(),
        componentType: "modern",
        format: "dd/MM/yyyy HH:mm",
        timeFormat: "HH:mm"
      });

Regards,
Aleksandar
Progress Telerik