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Kotak Mahindra Bank - “Strong growth and benign credit cost aids profitability”

ICICIdirect Research 08 May 2026 DISCLAIMER

Kotak Mahindra Bank delivered healthy Q4FY26 performance, marked by advances growth of 16.2% YoY (3.2% QoQ), led by strong traction in business banking (24% YoY) and mortgages (18% YoY), while the corporate book grew 22% YoY but remained flat QoQ due to conscious avoidance of low-spread lending. On the liabilities side, CASA improved ~200 bps QoQ to 43.3%.
Adjusted NIM stood at 4.54% (flat QoQ) as benefits from deposit repricing and higher credit growth offset the impact of repo rate transmission. Management expects margins to remain range-bound with a gradual downward bias, as the benefit from deposit repricing is largely behind and higher term deposit rates—particularly on longer tenures—begin to reflect in cost of funds, with pressure likely more visible in H2FY27. However, this is expected to be partly offset by incremental build-up in higher-yielding unsecured segments (currently at 8.9% of advances).
Asset quality outlook remains stable, with credit cost moderating sharply to ~39 bps (vs 63 bps in Q3), supported by improving collection efficiencies and stabilization in unsecured portfolios (MFI, PL, cards), while rural and CV segments remain key monitorable.
We expect bank to deliver ~15% CAGR in business growth and RoA at ~2%, however scope for substantial improvement remains limited. Basis this, we value standalone bank at ~2.2x FY28E ABV. Buy, Target - ₹475)

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