Kotak Mahindra Bank Shares Slide 2.6% Amid Nifty Decline; Q4 Earnings Show Margin Expansion, but Return on Equity Lags

Kotak Mahindra Bank Shares Dip Despite Q4 FY26 Results Exceeding Expectations

Kotak Mahindra Bank's shares experienced a decline on Monday, despite the lender's Q4 FY26 results surpassing market expectations. Brokerage firms highlighted the bank's margin gains and improved asset quality, but noted relatively weaker return ratios.

During morning trade, Kotak Mahindra Bank stock was trading at Rs 373.35, down 2.6 percent on the day. Over the past year, the stock has declined by approximately 10.5 percent, compared to a roughly 1 percent fall in the Nifty 50 over the same period.

The private sector lender reported a 13.4 percent year-on-year increase in net profit, standing at Rs 4,026.55 crore for the March quarter, exceeding Bloomberg estimates. Net interest income (NII) rose 8.1 percent on-year to Rs 7,876 crore.

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Operating profit increased 7 percent year-on-year to Rs 5,855 crore. Interest income grew 4.8 percent to Rs 14,175 crore, while interest expense rose just 0.9 percent to Rs 6,299 crore. Other income declined 2.1 percent to Rs 3,116 crore. The bank's margins demonstrated improvement on a sequential basis, with net interest margin at 4.67 percent for the quarter, compared to 4.54 percent in the previous quarter, although lower than 4.97 percent a year ago.

Asset quality strengthened during the quarter, with gross non-performing assets easing to 1.20 percent from 1.30 percent quarter-on-quarter. Net NPAs declined to 0.25 percent from 0.31 percent. Provisions fell sharply by 36 percent sequentially to Rs 516 crore, supporting profitability.

Loan growth remained healthy, with net advances rising 16 percent year-on-year to about Rs 4.96 lakh crore, while deposits grew 15 percent to around Rs 5.72 lakh crore.

Brokerage firm Bernstein maintained a 'market perform' rating on Kotak Mahindra Bank stock with a target price of Rs 500 per share. The bank delivered a strong quarter with broad-based performance, with net interest margins expanding and credit costs declining on the back of improved asset quality. However, Bernstein flagged that return on equity continues to lag peers.

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UBS retained a 'buy' rating with a target price of Rs 500 per share. The profit beat was driven by higher pre-provision operating profit and lower credit costs. The brokerage said improving asset quality and stable margins support valuations.