Accumulate Kotak Mahindra Bank; target of Rs 2362: Deven Choksey

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26 Aug, 2025 12:21

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Net Advances rose 16% YoY to INR 46,26,880 mn, supported by broad-based growth across retail and corporate segments. Deposit growth remained healthy at 14% YoY, reaching an average base of INR 51,05,380 mn. Average Current Deposits grew 14% YoY, while Average Savings Deposits were up 8% YoY; however, the continued shift towards term deposits (+20% YoY) weighed on CASA mix, which moderated to 42.3%. The credit-to-deposit ratio stood at 87.5%. NIM for the quarter stood at 4.54%, reflecting compression from asset mix change. NII came in at INR 73,107 mn, 3.6% below our estimates (INR 75,805 mn). Fee and service income rose modestly by 4% YoY to INR 24,150 mn. Operating expenses increased only 1% YoY to INR 46,320 mn, helping contain the cost-to-income ratio despite lower operating income. Consequently, operating profit grew 3% YoY to INR 52,680 mn. PPOP stood at INR 52,683 mn. Net Profit came at INR 32,533 mn.

We value Kotak Mahindra Bank using the SOTP approach, with the core banking operations at 2.9x FY27E ABVPS valued at INR 2,186 and valuing its stake in its subsidiaries and associates at a cumulative value of INR 176, implying a target of INR 2,362 per share. We reiterate our “ACCUMULATE” rating on the stock.

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