Kotak Mahindra Bank shares fall over 3% despite Q1 profit growth. Analysts weigh in

Shares of Kotak Mahindra Bank declined 3.5% to Rs 376 on the BSE on Monday after the lender reported a standalone net profit of Rs 4,123 crore in the first quarter of FY27, marking a 26% jump from the year-ago period.

Net interest income increased 9% YoY to Rs 7,928 crore from Rs 7,259 crore, while the bank's net worth rose more than 14% YoY to Rs 1.4 lakh crore.

Asset quality improved on a year-on-year basis, although key ratios weakened sequentially. Net non-performing assets (NPA) declined 11% YoY to Rs 1,358 crore from Rs 1,531 crore, but increased 7.5% from Rs 1,262 crore reported in the March quarter. Gross NPA fell 8% YoY to Rs 6,122 crore, with the gross NPA ratio at 1.18% and the net NPA ratio at 0.27%. Fresh slippages during the quarter declined 27% YoY to Rs 1,321 crore.


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Should you buy, sell or hold Kotak Mahindra Bank shares?

Motilal Oswal has reiterated its Buy rating on Kotak Mahindra Bank with a target price of Rs 470, implying an upside of around 21%. The brokerage said the bank delivered a steady quarter, supported by controlled slippages and credit costs, along with stable net interest margins (NIM). It expects NIM to improve gradually as the share of unsecured and commercial loans increases, while noting that the unsecured portfolio has largely stabilised and credit costs should remain well contained.

Motilal Oswal highlighted a meaningful pickup in corporate lending, driven by better spreads and volatility in treasury markets, with the bank aiming to outpace system loan growth through a mix of organic and inorganic expansion.

JM Financial has maintained its Add rating on Kotak Mahindra Bank with a target price of Rs 415, implying an upside of around 6.4%. The brokerage said the bank continues to benefit from steady asset quality and the acquisition of Deutsche Bank's India consumer banking business, although sluggish loan growth is likely to keep profitability improvement gradual. It believes the stock's current standalone valuation of around 1.4x FY28E BVPS remains reasonable and has valued the core banking business at 1.6x FY28E BVPS while retaining its target price.

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Dolat Capital has maintained its Accumulate rating on Kotak Mahindra Bank with a target price of Rs 455, an upside of 17% from current levels. The brokerage said the bank's Q1FY27 profit after tax was largely in line with expectations, as treasury losses were offset by lower-than-expected credit costs, while return on assets (RoA) remained stable at 2.1%.

Dolat Capital's target valuation of 1.7x FY28E core price-to-book reflects the bank's strong liability franchise and expectation of 15% loan growth. While it expects return on equity (RoE) to remain below peers despite lower credit costs and stable margins, the brokerage believes the stock's current valuation of 1.3x FY28E core P/B remains attractive and supports its positive stance.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)