Kotak Mahindra Bank In Focus: Goldman Sachs and Citi have turned their focus to Kotak Mahindra Bank's sharp acceleration in loan growth, with both brokerages highlighting stronger balance-sheet momentum and robust FCNR(B) deposit mobilisation.
While Citi retained its ‘Buy' rating with a Rs 465 target, Goldman Sachs raised its target to Rs 540 from Rs 509 and increased earnings estimates.
The common point in both brokerage calls is the pace of growth i.e. Kotak Mahindra Bank's advances jumped 24.7% year-on-year (YoY) in the July-September (Q2FY27) quarter, while deposits grew more than 23%.
For Goldman Sachs, stronger loan growth and FCNR(B) inflows were considerable enough to warrant a higher earnings outlook.
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Goldman Sachs Raises Target To Rs 540 On Stronger Loan, Deposit Growth
Goldman Sachs maintained its 'Buy' rating on Kotak Mahindra Bank but raised its target price to Rs 540 from Rs 509.
The brokerage highlighted the bank's strong mobilisation of FCNR(B) flows and a sharp acceleration in organic loan growth, which reached 19% YoY.
Deposit growth was also strong at 23% YoY and 14% QoQ, giving Goldman Sachs greater confidence in the bank's balance-sheet trajectory.
The brokerage raised its earnings estimates to account for stronger-than-expected loan growth, stronger-than-expected FCNR(B) deposit inflows and higher-than-expected RBI rate hikes.
Citi Sees Broad-Based Strength Across Key Lending Segments
Citi retained its 'Buy' rating with a target price of Rs 465, pointing to the 24.7% YoY surge in advances.
According to Citi, the growth beat was supported by continued strength in corporate banking, SME, LAP and MFI segments. The brokerage said the bank delivered a “marked step-up” in balance-sheet momentum.
Citi also highlighted FCNR(B) deposit mobilisation as an additional growth driver, adding further thrust to the bank's already strong sequential accretion.
Kotak Mahindra Bank Q2 Business Update
Kotak Mahindra Bank's total deposits stood at Rs 6.51 lakh crore in the July-September quarter, up 23.2% from Rs 5.29 lakh crore a year earlier. On a sequential basis, deposits rose 13.7% from Rs 5.73 lakh crore in the previous quarter.
Net advances increased 24.7% YoY to Rs 5.77 lakh crore, while sequential growth stood at 12.7% from Rs 5.12 lakh crore.
CASA deposits rose 11.3% YoY to Rs 2.49 lakh crore from Rs 2.24 lakh crore and increased 7.8% sequentially from Rs 2.31 lakh crore.
The bank also reported an increase in average net advances, average CASA and average deposits.
Kotak Mahindra Bank had mobilised $5.78 billion in FCNR(B) deposits through the RBI's swap window as of September 30.
Kotak Mahindra Bank Q1 Highlights
Kotak Mahindra Bank reported a 26% YoY increase in Q1 net profit to Rs 4,123 crore, supported by growth in net interest income and operating profit.
Net interest income rose 9.2% YoY to Rs 7,928 crore, while operating profit increased 10.2% to Rs 6,131 crore. Asset quality remained broadly stable, with gross NPA improving to 1.18% from 1.20% in the previous quarter.
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