International brokerage UBS has maintained its neutral stance on Kotak Mahindra Bank, while raising the target price from Rs 1,800 to Rs 1,950.
The bank faces cyclical challenges related to net interest margin (NIM) and current account savings account (CASA) deposits, coupled with rising credit costs, said the brokerage.
Kotak Mahindra Bank is more sensitive to interest rate cuts compared to other banks under UBS’s coverage. Stability in its core business operations will be essential for any potential re-rating in the future.
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In April, the Reserve Bank of India (RBI) stopped Kotak from adding new customers via its online and mobile banking channels, and from issuing new credit cards, due to information technology-related deficiencies.
The central bank said Kotak Mahindra Bank has repeatedly failed to address the concerns around the bank’s IT systems over the last 2 years. The ban will not affect existing customers and Kotak can continue to provide services to them, including credit card customers, the RBI said.
Kotak Mahindra Bank shares have traded flat over the past year, rising around 5.6 percent in trade as against the Nifty 50's 12-month run of 26 percent.
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