Shares of Kotak Mahindra Bank Ltd. climbed 4.55 percent to a new 52-week high of Rs 460 in Thursday's trading session. The upswing follows the bank's September quarter (Q2 FY27) earnings report, which met expectations and prompted several domestic brokerages to maintain or upgrade their positive outlooks on the private lender.
HDFC Securities noted that Kotak Mahindra Bank's Q2 FY27 earnings were supported by a 13 percent quarter-on-quarter (QoQ) volume growth, despite some net interest margin (NIM) compression. Loan growth reached 25 percent year-on-year (YoY), boosted by advances against FCNR(B) deposits and transfers from KMIL. Excluding these specific factors, loan growth remained strong at approximately 19 percent YoY, accompanied by 23 percent deposit growth.
Improved Asset Quality Drives Optimism
A significant highlight from the Q2 FY27 results was the improvement in asset quality. Gross slippages decreased to 0.85 percent, and credit costs stood at 0.35 percent. Both gross and net non-performing assets (NPAs) saw improvements, falling to 1 percent and 0.2 percent respectively.
In response to the performance, HDFC Securities upgraded its FY27E/FY28E forecasts by 7 percent/8 percent and introduced FY29E estimates. The brokerage maintained a 'BUY' rating with a revised SOTP-based target price of Rs 480, up from its previous target of Rs 460. However, HDFC Securities also cautioned that a conservative approach to loan growth amid high competitive intensity and excess capital could still impact Return on Equity (RoE).
Brokerages Maintain Positive Ratings and Raise Targets
Religare Broking also praised Kotak Mahindra Bank's healthy Q2 FY27 performance, affirming its 'BUY' rating. Citing the bank's strong capital position and improving operational metrics, Religare set a target price of Rs 518.
Similarly, Elara Capital described the September quarter results as 'steady' and recommended an 'Accumulate' rating on the stock, setting a target price of Rs 485.