Kotak Mahindra Bank rallies 10% as strong Q3 results spark bullish upgrades from brokerages

Shares of Kotak Mahindra Bank rallied nearly 10% in early trade on Monday, recovering from the losses of the previous session, after the private lender posted healthy results for the December quarter of the current fiscal year. Sentiment was further boosted as brokerages turned bullish on the stock and upgraded its target price to as high as ₹2,150, citing steady performance amid challenging macroeconomic conditions and the RBI’s restrictions on credit card issuance and onboarding new customers digitally. Analysts expect the reversal of the RBI’s action to serve as a major catalyst for the stock in the near term.

Earlier today, Kotak Mahindra Bank shares opened higher at ₹1,882.10, up 7% from the previous closing price of ₹1,758.65 on the BSE. Extending its opening gains, the large-cap stock rose as much as 9.6% to ₹1,928.65, pushing its market capitalisation to ₹3.8 lakh crore. The country’s third-largest private bank by market capitalisation had ended the previous session 2.6% lower, in line with broader market trends, as investors booked profits ahead of the Q3 results.

The counter reached its 52-week high of ₹1,953 on September 23, 2024, and a 52-week low of ₹1,544.15 on May 3, 2024. Over the past year, the stock has gained 7.5%, with a rise of more than 9% in six months and 10% in the past month. In the calendar year 2025, the banking stock has already added over 7%.

For Q3 FY25, Kotak Mahindra Bank reported a 10% growth in net profit to ₹4,701.02 crore, compared to ₹4,264.78 crore in the same period last year. Sequentially, however, net profit declined by 7% from ₹5,044.05 crore in the September quarter of FY25.

The bank’s net interest income rose by 14.75% to ₹16,633.14 crore, compared to ₹14,494.96 crore in the corresponding quarter of the previous fiscal year. On a quarter-on-quarter basis, interest income improved marginally from ₹16,426.97 crore in Q2 FY25.

In terms of asset quality, the gross non-performing asset (NPA) ratio increased slightly to 1.51% in Q3 FY25 from 1.48% in Q2 FY25 but improved from 1.68% in Q3 FY24. Meanwhile, the net NPA ratio dropped to 0.44% from 0.45% as of September 30, 2024, and 0.36% as of December 31, 2023.

Analysts Upgrade Ratings and Target Prices Post Q3

Motilal Oswal upgraded Kotak Mahindra Bank’s rating to ‘Buy,’ revising its target price to ₹2,100 from ₹1,900, citing strong operating performance despite macroeconomic challenges. “We marginally raise our earnings estimates and expect KMB to deliver FY26E RoA/RoE of 2.2%/13.5%. After being Neutral on the stock for nearly four and a half years, we are now upgrading our rating to BUY with a target price of ₹2,100, premised on 2.2x Sep’26E,” it noted.

The brokerage anticipates that the reversal of the RBI’s ban on card issuance and the resumption of customer onboarding through online and mobile banking channels will act as powerful near-term catalysts. In April last year, the RBI had barred Kotak Mahindra Bank from onboarding new customers and issuing fresh credit cards, citing concerns over its technology platforms.

YES Securities has also upgraded KMB to ‘Buy’ with an unchanged price target of ₹2,150. It has assigned a value of ₹736 per share to the bank’s subsidiaries. The brokerage believes that the bank can overcome digital ban, over-capitalisation, and Activmoney dependence.

JM Financial has also revised rating to ‘Buy’ with a price target of ₹2,100 (subsidiaries valued at ₹823). “Given systemic growth challenges and elevated credit costs we expect core bank’s earnings growth to remain relatively tepid. We adjust our earnings estimates for FY25/FY26 upwards by 3%/5% and roll forward to FY27 valuing the core bank at 1.7x FY27e BVPS of ₹748,” it says.

Similarly, Nuvama also upgraded the stock to ‘Buy’, from ‘Reduce’, with a new target price of ₹2,040 against old price of ₹1,615. “We believe KMB offers growth, quality and a safe place to hide in a milieu of weak deposits and high NPLs. The bank has done a particularly commendable job turning in a strong Q3 even as it weathered the RBI ban.”

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