Key Takeaways
- Kotak Mahindra Bank’s Q2 net profit rose 29.5% to ₹4,212 crore.
- Net interest income increased 15.7% to ₹8,459 crore during Q2FY27.
- JM Financial raised its target price to ₹500 and upgraded its rating to Buy.
Kotak Mahindra Bank Q2 results drove shares up as much as 3.73% to ₹446.15 on the BSE after the private sector lender reported strong earnings for the second quarter of FY27. Net profit and net interest income beat expectations, while healthy loan growth supported performance. However, the bank’s net interest margin declined from a year earlier, keeping pressure on a key measure of lending profitability.
Kotak Mahindra bank Q2 results drive share price gains
The Kotak Mahindra Bank Q2 results showed a 29.5% year-on-year increase in net profit to ₹4,212 crore for Q2FY27. Net interest income (NII), which measures the difference between interest earned on loans and investments and interest paid on deposits and borrowings, rose 15.7% to ₹8,459 crore.
Despite the growth in earnings, net interest margin (NIM) fell to 4.31% from 4.54% in the same quarter last year. NIM measures how effectively a bank earns interest from its assets after accounting for interest costs. A lower margin can limit the benefit of higher lending volumes if loan growth does not offset the pressure.
At 10:00 AM, Kotak Mahindra Bank shares traded 2.38% higher at ₹440.35 on the BSE, after reaching an intraday high of ₹446.15. The stock’s movement followed the earnings announcement and a largely positive response from brokerages.
Healthy loan growth, particularly in the corporate and small and medium enterprise (SME) segments, supported the bank’s performance. However, margin pressure remains an important factor as the lender works to sustain earnings growth.
Brokerages revise Kotak Mahindra Bank target prices
JPMorgan retained its Overweight rating and raised its target price to ₹492 from ₹468. The brokerage pointed to growth across customer segments, technology investments, and cost discipline. It expects the bank to deliver a compound annual growth rate (CAGR) of 20% in earnings between FY26 and FY29.
JPMorgan also noted that margins had moderated due to the impact of foreign currency non-resident bank deposits, known as FCNR(B) deposits. It expects margins to recover by Q4 as liquidity is deployed and changes in policy rates pass through the bank’s operations.
Bernstein maintained its Market Perform rating with a target price of ₹500 per share. It said balance sheet growth continued to support earnings per share despite pressure on margins. However, it noted that Kotak Mahindra Bank’s margin compression remained sharper than that of its peers.
JM Financial upgraded the stock to Buy from Add and increased its target price to ₹500 from ₹415. It raised its FY27 and FY28 earnings per share estimates by 5% and 7%, respectively.
The brokerage highlighted ₹205 billion in undeployed liquidity that could support loan growth through FY28. It also cited credit costs of 35 basis points and steady cost ratios. However, it expects margins to remain under pressure in the near term as the full impact of FCNR(B) deposits appears in Q3, with recovery expected from Q4.
Brokerage views following the Kotak Mahindra Bank Q2 results reflect differing assessments of the bank’s growth prospects and margin risks. The next few quarters will show whether loan growth and improved liquidity use can offset pressure on lending margins.
