Buy Kotak Mahindra Bank; target of Rs 2500: Motilal Oswal

Motilal Oswal's research report on Kotak Mahindra Bank

Kotak Mahindra Bank (KMB) reported a standalone 2QFY26 PAT of ~INR32.5b (in-line with MOFSLe). Consol PAT stood at INR44.7b (down 11% YoY/flat QoQ). NII grew 4.1% YoY/0.7% QoQ to INR73.1b (in-line). NIMs contracted 11bp QoQ to 4.54% (vs our est of 4.51%). Advances growth stood strong at 15.8% YoY/4% QoQ to INR4.63t, led by robust growth in BB, SME, HL, and corporate advances. Deposits also witnessed healthy growth at 14.6% YoY/3.1% QoQ, led by faster growth in CASA deposits at 6.7% QoQ (11.2% YoY). CASA ratio improved to 42.3% Slippages declined 13% YoY/ 10% QoQ to INR16.3b (INR18.1b in 1QFY26 and INR14.9b in 4QFY25). The bank indicated a decline in credit costs across MFI, PL, and CC, while remaining cautious about stress in retail CV. GNPA ratio declined 9bp QoQ to 1.39%, while NNPA declined 2bp QoQ to 0.32%.

Outlook

We maintain our earnings and estimate an RoA/RoE of 2%/ 12.7% by FY27. Reiterate BUY with a revised TP of INR2,500 (2.5x FY27E ABV).