Kotak Bank falls over 7% on disappointing Q1 results

Mumbai: Shares of Kotak Mahindra Bank fell over 7% on Monday, their highest single-day fall in 15 months, after the bank's first-quarter results disappointed investors. Analysts see 2-30% upside in the stock from these levels. The stock ended at ₹1,968.7, down 7.3% from Friday. It was the worst performer on the benchmark Nifty, which fell 0.6%. Macquarie has maintained its 'neutral' rating for the stock, and has a target price of ₹2,300. The brokerage said the bank's credit costs were in line with the third-largest private bank and double those of the top two private banks, which is surprising given the bank's historically strong underwriting practices.

Kotak shares have declined 9% in the past month, against Nifty Bank's decline of 2.1% in this period. SBI Securities estimates the fair value of stock at ₹2,000-₹2,050 over next 12 months and suggests buy-on-dips approach.

"Loan and deposit growth remains steady, and with the embargo on the 811 platform lifted and new product offerings in place, performance is likely to improve from Q3 onwards, provided there are no further rate cuts," said Sunny Agrawal, head of fundamental research at SBI Securities. In February, the RBI had lifted the restriction on opening new bank accounts digitally via Kotak 811 platform, after a ban was imposed in April 2024. Nomura has a 'neutral' rating, with a revised price target of ₹2,150. "Kotak's results in Q1FY26 were soft, led by asset quality deterioration and a sharper decline in NIMs. Slippages and credit costs were elevated at 1.7% and 1.2%, respectively," said brokerage Nomura's analysts.