Shares of Kotak Mahindra Bank jumps almost 10% on the back of better Q3 numbers and Brokerage upgrades
Kotak Mahindra Bank touched intraday high while trading over 9% higher in the morning on Monday to recoup losses from the prior session. This spike came after the private lender issued and audited set of financials showing the December quarter of the current financial year. Brokerages adjusted their target prices up to ₹2,150, focused on the bank steady revenue growth in the background of weak macroeconomic environment and key restrictions on the credit card market and digital customer identification provided by RBI. According to some observers, the undoing of the various curbs imposed by the RBI will likely act as the key near-term driver for the stock.
Performance of Stocks and Market Capitalization
Kotak Mahindra Bank today morning started at ₹1,882.10 intraday with an up movement of 7% to its previous close price of ₹1,758.65 on BSE. The counter went on to hit intraday high at 9.6% to ₹ 1,928.65 boosting its market capitalization to ₹ 3.8 lakh crore. The bank’s shares had, prior to the cut off, closed 2.6points lower following a general trend of profit taking as investors waited on the Q3 results.
52-Week Stock Performance
The stock has appreciated by 7.5% over the past year, well over 9% in the past six months, and more than 10% in the past month. For the banking stock in the calendar year 2025, there are already more than 7% of additions.
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Q3 FY25 Financial Highlights
The NBFC giant declared a 10% yoy growth in third quarter accelerated fiscal year 2025 (Q3 FY25) net profit of ₹4,701.02 crore, against ₹4,264.78 crore in the same period previous fiscal. , however, for the quarter ended in the sequential basis the net profit came down to 7% at ₹5,044.05 crore from ₹5,322.61 crore of the previous quarter of FY25.
Net interest income of the bank increased by 14.75 per cent to ₹16,633.14 crore as against ₹14,494.96 crore during the same period of the previous financial year. On a quarter on quarter basis, interest income was slightly higher in Q2 FY25 at ₹16,426.97 crore.
Asset Quality Metrics
On the parameter of asset quality, gross non-performing asset (NPA) ratio was slightly higher at 1.51% in Q3 FY25 as against 1.48% in Q2 FY 25 but was higher than 1.68% of Q3 FY 24. On the other hand, the net NPA ratio reduce to 0.44 as of September 30, 2024 from 0.45 as of September 30, 2024 and 0.36 as of December 31, 2023.
Brokerage action on upgrades and target prices
Following the Q3 results, several brokerages have upgraded their ratings and target prices for Kotak Mahindra Bank:
- Motilal Oswal: Changed the rating to ‘Buy’ and adjusted the target price to ₹ 2,100 per share from ₹ 1,900 per share, thanks to robust operations in the face of macroeconomic shocks. The online brokerage firmly believes that the ability of the RBI to reverse its decision of a ban on card issuance and customer onboarding through online and mobility banking channels will act as the most influential near term catalyst.
- YES Securities: Upped the stock to ‘Buy’ with no change in the price estimate of ₹2,150, with ₹736 placed on the bank’s subsidiaries. Digital ban, over-capitalisation and Activmoney dependence are three threats that the brokerage holds for the bank, but the bank can overcome all.
- JM Financial: Change of rating to ‘Buy’ along with target price of ₹2,100 with subsidiaries valued at ₹823. The brokerage has forecasted that the earnings growth of core bank will not see much of an upto due to system wide growth blues and higher credit expenses.
- Nuvama: It has upgradted the stock from ‘Reduce’ to ‘Buy’ with the new target price of ₹2,040 as against the previous target of ₹1,615. The brokerage says Kotak Mahindra Bank has growth, quality, and is a safe haven in an environment of soft deposits and high NPLs.
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