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HDFC Securities Institutional Equities
Kotak Mahindra Bank:
Kotak Mahindra Bank Ltd.'s Q3 FY26 earnings were below estimates, as flattish margins, soft traction in fee income, and relatively high opex intensity was partly offset by higher growth on both sides of the balance sheet. Healthy loan growth (16% YoY) was driven by mortgages, business banking, SME segments. Deposit growth (~14% YoY) was strong with CASA ratio at 41.3% (-101bps QoQ) and softer than usual traction in CA balances. While the stress in unsecured segments has largely abated, stress in retail CV segment remains elevated.
HDFC Securities remains constructive on Kotak Mahindra Bank, expecting growth momentum to sustain in RoA-accretive segments such as loan-against-property, commercial vehicle/construction equipment, tractors, business banking, and SME, concomitantly reshaping its unsecured segment strategy.
The brokerage cuts its FY26E/FY27E earnings forecasts by ~5/~2%, factoring in softer margins and fee income. Hence maintains Buy with a revised SOTP-based target price of Rs 495 (standalone bank at 2.3x Sep27 adjusted book value per share), factoring in the recent 1:5 stock-split.
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