Kotak Mahindra Bank Misses Q4 Estimates; Brokerages Downgrade Stock

Shares of Kotak Mahindra Bank Ltd are facing downgrades from a couple of brokerages, as the private lender missed analyst’s expectations on the front of net interest income (NII), pre-provision operating profit (PPOP) and profit after tax (PAT).

As per stock analysts, the bank’s asset quality improved in the fourth quarter,

According to Nomura, the value of the bank's major businesses trades at 1.9 times estimated FY27 book value per share and it sees limited upside potential ahead. “We downgrade KMB to Neutral with a revised target of Rs 2,200 (from Rs 2,110),” Nomura India said.

Nirmal Bang said that after a 15% increase in the stock price of Kotak Mahindra Bank during the last two months, the valuations are not up to the mark. “Further, a slowdown in loan growth in 4QFY25 is a cause of concern. We thus downgrade KMB from a ‘Buy’ to a ‘Hold’,” it said.

NII soared 1% QoQ and 8% YoY, which remained lowest among major banking players. Moreover, it also missed the consensus by 2.5%.

It said, “The stock has rallied 20 per cent since Q3 earnings. We believe KMB is better placed on growth and NIM (as it has cut fixed SA sharply and has a shorter tenor) than peers. All in all, we are increasing EPS and the TP, but downgrading the stock to ‘HOLD’ given its rich valuation. Our revised target of Rs 2,350/2.7x BV FY26E is higher than Rs 2,040 earlier.”

HDFC Institutional Equities believes that investments will remain elevated to augment balance sheet growth.

“We trim our FY25E/FY26E estimates by 2 per cent, factoring in pressure on NIMs, owing to rate cut cycle, and moderate our growth estimates; maintain Buy with a revised SOTP-based target of Rs 2,325 (standalone bank at 2.3x Mar-27 ABVPS),” HDFC Institutional Equities said.

Though FY25 growth remained modest, the bank expects growth to surge to 1.5-2 times of nominal GDP growth on the back of faster growth in the consumer segment and unsecured loans.

MOFSL said, “KMB’s CA book has been growing at a healthy pace, and the CASA ratio has seen a slight improvement, while the CD ratio has witnessed a mild decline in 4QFY25. The reversal of the ban on card issuance shall revive customer onboarding, which shall result in the protection of yields in the repo cut cycle.”

MOFSL gave a buy rating on the stock by setting a target price of ₹2,500. As of 10:52 am, shares of Kotak Mahindra Banks are trading at ₹2,075.40, down 5.02%.