Kotak Mahindra Bank shares climbed more than 2 percent on Monday, emerging among the top gainers on the Nifty 50, after the private sector lender reported strong earnings growth for the fiscal second quarter. Brokerage JPMorgan raised its target price on the stock, citing better-than-expected operating performance. Bernstein highlighted healthy loan growth but flagged continued pressure on margins.
Kotak Mahindra Bank stock rose 2.2 percent to Rs 440 in morning trade, outperforming the broader market. The stock has declined around 1 percent so far this year, compared with a 14.1 percent fall in the Nifty 50. The bank's market capitalisation stood at approximately Rs 4.37 lakh crore. The gains came amid weakness in benchmark indices. At 9:46 am, the Sensex was down 327 points at 72,797, while the Nifty declined 114 points, or 0.5 percent, to 22,486.
JPMorgan maintained its Overweight rating on Kotak Mahindra Bank and raised its target price to Rs 492 per share from Rs 468 earlier. The revised target implies an upside of over 14 percent from Friday’s closing price. The brokerage said the bank delivered a strong second quarter, beating expectations on key operating metrics. It expects higher interest rates to provide a tailwind to margins and earnings.
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JPMorgan said that foreign currency non-resident (FCNR-B) deposits could weigh on net interest margins (NIM) in the near term. However, an improving current account and savings account (CASA) deposit mix and better liquidity deployment should support a recovery. The brokerage also highlighted benign asset quality trends and expects the impact of the transition to expected credit loss (ECL) provisioning to remain manageable.