Kotak Mahindra Bank Q4 Results Review: Motilal Oswal Reiterates 'Buy', Hikes Target Price To Rs 2,500

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Motilal Oswal Report

Kotak Mahindra Bank Ltd. reported a mixed bag with net interest income being largely in line, while other income stood strong amid better fee income. The bank stepped up the provisioning run rate and raised provision coverage ratio by ~500 bp to 78. Its net interest margin improved 4 bp QoQ to 4.97% amid the benefits from the lower number of days in Feb’25.

While FY25 growth remained modest, the bank expects the same to rebound to 1.5-2.0x of nominal GDP growth backed by faster growth in the consumer segment and unsecured loans that should also support the overall yields.

Kotak Mahindra Bank’s current account book has been growing at a healthy pace, and the CASA ratio has seen a slight improvement, while the CD ratio has witnessed a mild decline in Q4 FY25. The reversal of the ban on card issuance shall revive customer onboarding, which shall result in the protection of yields in the repo cut cycle.

We tweak our earnings estimates and estimate Kotak Mahindra Bank to deliver an FY27E RoA/ RoE of 2.1%/13.3%. We reiterate our Buy rating with a target price of Rs 2,500 (premised on 2.5 times FY27E, SoTP of Rs 770).

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