Kotak Mahindra Bank reported healthy earnings growth in the second quarter of FY27, beating estimates across key operating metrics, supported by strong loan growth and resilient operating performance.
The private sector lender reported a 29.5% year-on-year (YoY) increase in net profit to Rs 4,212 crore in the September quarter. Net interest income (NII), which is the difference between interest earned and interest expended, rose 15.7% YoY to Rs 8,459 crore. Operating profit increased 21.1% YoY to Rs 6,382.2 crore.
However, the bank’s net interest margin (NIM), a key indicator of lending profitability, moderated to 4.31% in the September quarter from 4.54% in the corresponding period last year.
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Kotak Mahindra Bank’s asset quality improved sequentially in the quarter ended September 2026, providing further support to its operating performance.
Following the results, brokerages largely retained a constructive view on the lender, citing healthy loan growth, improving asset quality and the potential for earnings growth. However, margin pressure and higher provisions remain key factors to monitor.
JPMorgan Raises Target
JPMorgan reiterated its Overweight rating on Kotak Mahindra Bank shares and raised its target price to Rs 492 apiece from Rs 468 earlier.
According to the brokerage, the bank’s September-quarter performance reflected broad-based traction across its focus customer segments, alongside continued benefits from technology investments and cost discipline.
JPMorgan noted that headline NIMs moderated sequentially, partly due to FCNR(B) deposits, with full normalisation expected by the fourth quarter of FY27.
Kotak Mahindra Bank has also confirmed that the one-time impact of the transition to the expected credit loss (ECL) provisioning framework will be less than 2% of its net worth.
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The brokerage expects Kotak Mahindra Bank to deliver an earnings compound annual growth rate (CAGR) of 20% over FY26-FY29, which it believes would be the highest among large banks. It sees scope for further expansion in the bank’s price-to-earnings (P/E) multiple as investor confidence in the sustainability of its earnings growth improves.
JPMorgan’s estimates factor in two interest rate hikes and a 50-basis-point increase in the risk-free rate (RFR). The brokerage values Kotak Mahindra Bank at 17.3 times and 14.8 times its estimated FY27 and FY28 earnings, respectively.
A revival in the unsecured lending segment could provide additional upside, as it may support NIMs and return on assets (RoA), potentially leading to earnings upgrades and a higher price target, JPMorgan said. However, expensive inorganic growth opportunities remain a key downside risk.
The brokerage also highlighted Kotak Mahindra Bank’s exposure to the financialisation of domestic savings through its wealth management and asset management businesses, which could create further value over time.
Bernstein Maintains ‘Market-Perform’ Rating
Bernstein maintained its Market-Perform rating on Kotak Mahindra Bank, with a target price of Rs 500 per share.
The brokerage highlighted that strong balance-sheet growth continues to support earnings per share (EPS), despite pressure on margins. Loan growth remained healthy, driven primarily by the corporate and small and medium enterprise (SME) segments.
However, Bernstein noted that margin compression at Kotak Mahindra Bank remains sharper than that of its peers.
Asset quality continues to be benign, while the increase in provisions largely reflects buffers against standard assets, according to the brokerage. Although the bank’s operating performance remains resilient, higher provisions could weigh on its return on assets.
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