Kotak Mahindra Bank Q1 Results Review — Systematix Maintains 'Buy', Revises Target Price

During the quarter both income aspects and asset quality aspects have lagged brokerage's expectation and hence we have revised our estimates accordingly.

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Systematix Report

Kotak Mahindra Bank Ltd. reported Q1 FY26 PAT of Rs 32.8 billion down by -7.6% QoQ, largely due to the adverse impact of- fall in net interest margin, higher provisions. The NIM was impacted by transmission of fall in repo rate, lower share of unsecured loans and number of days effect. The slippages in the quarter were largely driven by microfinance, retail CV and rural loans.

The credit cost at 1.1% has been elevated in the quarter but expected to trend lower going forward as the stress in microfinance is expected to have peaked.

The advances growth has been healthy in the quarter at 4% QoQ and 14% YoY, where business banking and mortgages segment has been the key driver.

The deposits growth has also been strong at 3% QoQ and 15% YoY, driven by growth in term deposits.

During the quarter both income aspects and asset quality aspects have lagged our expectation and hence we have revised our estimates accordingly.

We continue to maintain our Buy rating on Kotak Mahindra Bank with a revised target price of Rs 2,450 (earlier Rs 2,500).

We are valuing the standalone bank at 2.2x on its FY27E book value per share of Rs. 752. Further, we assign Rs 794 per share value to its subsidiaries and associates.

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