Kotak Mahindra Bank shares slipped in early trade Monday, reacting to weaker-than-expected quarterly earnings. Investors took note of a 14% drop in year-on-year profit, even as key financial metrics showed signs of resilience.
Q4 FY25 Earnings: Profit Down, But Core Metrics Hold Steady
Shares of Kotak Mahindra Bank declined as much as 3.6% to ₹2,102.20 on the BSE following its Q4 FY25 earnings report. The bank posted a standalone net profit of ₹3,551.74 crore—down from ₹4,133.3 crore in the same quarter last year. While this decline concerned investors, the bank’s fundamentals remained intact in several areas.
Net Interest Income (NII) grew by 4.5% year-over-year, reaching ₹7,283.57 crore. Total income rose 6.8% YoY to ₹3,182.46 crore, while total expenditure surged 14.4% to ₹11,240.03 crore. These figures reflect cost pressures but also stable income generation, which could offer long-term reassurance to shareholders tracking market trends.
On the asset quality front, the gross non-performing assets (GNPA) ratio stood at 1.42%, slightly higher than the 1.39% recorded a year ago. Net non-performing assets (NNPA), however, improved marginally to 0.31% from 0.34%. The bank’s Net Interest Margin (NIM) remained robust at 4.96% for FY25 and 4.97% for the quarter—among the best in its peer group.
Analyst Ratings: Diverging Views, Strong Long-Term Signals
Brokerage firms responded with mixed views on Kotak’s outlook. Motilal Oswal maintained a “Buy” rating, keeping its target price at ₹2,500. Analysts noted that while higher provisions weighed on earnings, key strengths like loan growth and NIM performance indicate solid underlying health. The brokerage projects a Return on Assets (RoA) of 2.1% and Return on Equity (RoE) of 13.3% by FY27.
Meanwhile, Nuvama upgraded its target price from ₹2,040 to ₹2,350 but retained a “Hold” stance. The firm cited concerns over the bank’s rich valuation, especially after a 20% stock rally since Q3. Still, it acknowledged improved asset quality for the second consecutive quarter—a signal that the bank’s risk profile is stabilizing.
Elara Capital revised its rating from “Buy” to “Accumulate,” raising its target price to ₹2,330. The brokerage pointed to a subdued Q4 but praised the bank’s overall FY25 performance. Elara emphasized consistent asset quality trends and enhanced coverage ratios as key drivers for its positive long-term view.
That said, the modest loan growth and elevated expenses may prompt investors to monitor whether these factors become recurring headwinds. Still, the bank’s ability to maintain industry-leading NIMs and gradually improve asset quality keeps it in the spotlight amid broader bank rally and evolving market trends.