Kotak Mahindra Bank shares climb 4% after Q2 results. What are Jefferies, Goldman Sachs saying?
Kotak Mahindra Bank reported strong Q2FY27 earnings, with consolidated profit rising 26% year-on-year. Jefferies, Goldman Sachs, Motilal Oswal and Nuvama maintained Buy ratings, citing growth prospects and improving earnings outlook.
Shares of private lender Kotak Mahindra Bank gained 4% to Rs 446 on the BSE on Monday after it reported a 26% year-on-year (YoY) rise in consolidated profit after tax (PAT) to Rs 5,645 crore for the second quarter of FY27, compared with Rs 4,468 crore in the corresponding quarter last year.On a standalone basis, the private sector lender's PAT increased 29% YoY to Rs 4,212 crore in Q2FY27 from Rs 3,253 crore in Q2FY26.
Net interest income (NII) rose 16% YoY to Rs 8,459 crore from Rs 7,311 crore in Q2FY26.Should you buy Kotak Mahindra Bank shares?Jefferies maintains a Buy rating on Kotak Mahindra Bank with a target price of Rs 520, implying a 21% upside from the previous closing. Fee income rose 21% year-on-year, driven by stronger growth in general banking fees, while distribution and syndication income remained weaker.
Jefferies expects growth to normalise towards a 16% CAGR over FY27-29, with some margin expansion and operating synergies expected to offset lower bancassurance fees.According to management, the transition to the expected credit loss (ECL) framework could have a limited impact of less than 2% of net worth after tax, equivalent to 0.6% of loans before tax. The recurring impact is estimated at 12-15 basis points of loans.Live EventsGoldman Sachs reiterated its Buy rating on Kotak Mahindra Bank with a target price of Rs 540, retaining the stock on its Conviction List.
The bank reported a profit after tax (PAT) above estimates, supported by broad-based outperformance across key metrics. Core revenue exceeded expectations on strong net interest income (NII) and fee income, while costs were below estimates after adjusting for one-off items.Asset quality remained strong, with non-performing asset (NPA) provisions declining both year-on-year and quarter-on-quarter. Loan growth improved across SME, unsecured, vehicle, secured retail and corporate segments.
Underlying net interest margins (NIMs) remained stable after adjusting for FCNR-related and day-count effects.Goldman Sachs described Kotak Mahindra Bank's earnings growth outlook as one of the strongest in its coverage and raised its FY27-FY29 earnings estimates. However, it retained the target price at Rs 540, as improving return on equity (RoE) progression offsets a higher cost of equity.Motilal Oswal maintains a Buy rating on Kotak Mahindra Bank with a target price of Rs 500, implying an upside of 16%.Kotak Mahindra Bank reported a steady quarter, with strong net interest income (NII) growth partly offset by higher provisioning.
Net interest margins (NIMs) declined 22 basis points quarter-on-quarter due to surplus liquidity from FCNR(B) deposits. However, margins are expected to improve as the excess liquidity is deployed, and the impact of repo rate hikes is transmitted.The brokerage noted that the bank's unsecured portfolio has stabilised and management expects credit costs to remain well contained. While overall advances growth remained steady, SME lending picked up meaningfully, supported by higher ECLGS lending.Nuvama has retained its Buy rating on Kotak Mahindra Bank with a target price of Rs 550 per share.
The brokerage has raised its earnings estimates by 2-8%, factoring in an improved growth trajectory, and expects the bank to deliver a return on assets (RoA) of 2.0-2.1% and return on equity (RoE) of 12-15% over FY27-29E. Its projected RoA would be the second-highest in the sector after ICICI Bank.Nuvama believes the management transition, with Anup Saha taking over as MD and CEO from January 1, 2027, should provide continuity and strengthen the bank's growth orientation, supporting a re-rating.
The brokerage values the standalone bank at 2.2x its September 2028 estimated adjusted book value (ABV) and its subsidiaries at Rs 155 per share to arrive at the target price of Rs 550.Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication.
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