Buy Kotak Mahindra Bank; target of Rs 2650: ICICI Securities

ICICI Securities's research report on Kotak Mahindra Bank

Kotak Mahindra Bank (KMB) reported in-line Q2FY26 PAT of INR 32.5bn as muted other income (treasury loss) was offset by tight opex control. RoA stood strong at 1.9%. KMB sustained industry leading loan growth of 16% YoY, led by 16-17% YoY growth in retail / wholesale, while commercial was muted at 5% YoY. Despite effecting highest SA rate cut among peers, fixed rate savings balances grew faster than peers at 5% QoQ. Core PPOP growth of 8% YoY was better vs. peers, though reported NIM decline of 11bps QoQ to 4.54% was relatively weaker. Gross slippages eased marginally, though net slippages improved at a healthy pace. Credit costs eased QoQ, partly aided by INR 0.5bn w-back from AIF. We see further scope for improvement in slippages / credit costs. We believe KMB is likely to sustain its leadership in loan growth.

Outlook

Which we believe, is likely to resume growth sequentially starting Q3. Maintain BUY. We increase our TP to INR 2,650 (vs. INR 2,570), based on ~2.7x core FY27E ABV (~2.6x earlier). Risks: Any lumpy inorganic acquisition and higher stress.