Kotak Mahindra Bank’s Q2 performance has garnered mixed reactions from top brokerages. The bank faced headwinds from macroeconomic conditions, a regulatory embargo, and rising provisions, leading to varying outlooks. Here’s a look at what major analysts are saying about Kotak Mahindra Bank:
Goldman Sachs: Buy, target price Rs 2286, sees 22% upside
Goldman Sachs remains optimistic with a Buy rating on Kotak Mahindra Bank and a target price of Rs 2286, reflecting a potential 22% upside. Despite missing Q2 estimates by 5% vs GS and 2% on consensus, the bank’s core Pre-Provision Operating Profit (PPOP) growth and loan growth were still healthy, up 15% YoY and 12% YoY respectively. However, the bank faced multiple headwinds, including a Reserve Bank of India (RBI) embargo, higher delinquencies in unsecured lending and microfinance loans, and slower loan growth. On a positive note, the commercial retail product segment continued to perform well, providing a good outlook for PPOP growth.
JPMorgan: Overweight, target price Rs 2030, sees 8% upside
JPMorgan maintains an Overweight rating on Kotak Mahindra Bank, with a target price of Rs 2030, implying an 8% upside. The bank’s Q2 net income of Rs 33.4 billion, up 5% year-on-year, was 2% below JPMorgan’s expectations, driven by higher provisions and pressure on asset quality. The bank’s CASA growth was muted at 4% year-on-year, with total deposits growing 15% year-on-year. Loan growth was also slower, with advances growing 15% year-on-year. However, JPMorgan sees the recent acquisition of Standard Chartered India’s personal loan book as a positive, potentially boosting Net Interest Margins (NIMs) and expanding cross-sell opportunities for the bank.
Jefferies: Hold, target price Rs 2080, sees 11% upside
Jefferies retains a Hold rating on Kotak Mahindra Bank, setting a target price of Rs 2080, reflecting an 11% upside. The bank’s Q2 profit of Rs 33 billion, up 5% year-on-year, was largely in line with estimates. However, the brokerage highlighted concerns over Net Interest Margins (NIMs), which continue to underperform peers due to rising costs of funds and a lower share of unsecured loans. Jefferies also flagged potential risks from credit card and MFI slippages in the upcoming quarters, cautioning that credit costs may increase further. On the positive side, deposit growth was strong at 15% year-on-year.
Bernstein: Market Perform, target price Rs 1750, sees 6% downside
Bernstein adopts a more cautious view, rating Kotak Mahindra Bank as Market Perform with a target price of Rs 1750, implying a 6% downside. The brokerage described the bank’s Q2 results as “uninspiring,” with RoA dipping to 2.2% amid continued NIM compression, moderation in net operating income, and rising credit costs. While loan growth was healthy at 18% year-on-year, deposit growth of 15% was in line with peers, offering limited upside in deposit growth performance compared to competitors.
The current market price (CMP) of Kotak Mahindra Bank is Rs 1,871.85.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Please consult a financial advisor before making any investment decisions.
