Crime Today News
Target: ₹2,500
CMP: ₹2,153
Kotak Mahindra Bank is well-positioned to deliver superior performance. We should see a marginal uptick in the loan growth led by a rebound in the unsecured segment in FY26E although the slowdown in the unsecured retail segment was adequately compensated by uptick in the secured book and non-retail segment in 9MFY25.
NIMs faced downward pressure due to rising funding cost and lower share of high yielding assets in 9M-FY25 due to embargo but as embargo has been lifted, we believe that growth rebound in PL/CC and acquisition of the high-yielding PL book from Standard Chartered Bank will likely to help bank in managing the margins partially offsetting yield pressure from rate-cuts in FY26E.
We reiterate buy on KMB with a revised SOTP-based PT of ₹2,500 given growth/profitability is expected to be better than peers in FY26. The bank is reasonably confident to sustain RoA over about 2 per cent in the near to medium term. We also expect its subsidiaries’ contribution to increase to consolidated earnings, as it gains scale and market share gradually going forward.
Key Risks: Slower loan growth, higher credit cost, lower margins and slower growth in retail liabilities.
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