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Informist, Thursday, Oct. 23, 2025

 

By Vaishali Tyagi

 

MUMBAI – Kotak Mahindra Bank Ltd.'s net profit growth for the September quarter is expected to remain flat year-on-year, as growth in the bank's business operations is expected to be offset by pressure on net interest margins. Most brokerages expect moderation in the net interest margin as they see net interest income growing slower than average loan growth. This is because the decline in the yield on advances will likely outpace the fall in the cost of deposits, analysts said. Consequently, net interest margin is expected to be lower sequentially.

 

The country's fourth-largest private sector bank is seen posting a net profit of INR 33.38 billion for the September quarter, broadly unchanged from the year-ago quarter, according to the average of estimates of 10 brokerage firms. The private sector lender's bottom line is expected to rise nearly 2% sequentially. Estimates for the bank's net profit ranged from INR 31.83 billion to INR 35.99 billion. The bank will announce its Jul-Sept earnings Saturday.

 

Brokerages expect the bank's net interest margin to fall sequentially in the range of 4 to 17 basis points in the reporting quarter due to a limited rise in net interest income. In the June quarter, the net interest margin had fallen to 4.65% from 4.97% in the previous quarter. ICICI Securities expects the net interest margin to fall by 4 bps, while Nirmal Bang Equities sees a 17 bps fall in the net interest margin for the September quarter.  

 

Most brokerage firms expect a marginal rise in the net interest income for the September quarter. The bank's net interest income is seen rising nearly 1% on quarter to INR 73.13 billion, as per the average of the estimates of 10 brokerages. On a year-on-year basis, the net interest income is seen rising nearly 4%. The net interest income of the bank had risen only 6% on year to INR 72.60 billion in the June quarter.

 

Analysts expect the bank's credit cost to remain elevated in the reporting quarter, seen rising 3 bps on year. In the June quarter, the annualised credit cost for the bank had risen sharply to 0.93% from 0.55% a year ago and 0.64% a quarter ago. 

 

For the September quarter, brokerages see Kotak Mahindra Bank's loan growth on a quarter-on-quarter basis to be marginal, ranging between 2.5% to 4.5%. In the June quarter, advances had grown 14% on year to INR 4.45 trillion, outpacing deposit growth of 13% on year to INR 4.92 trillion. "Sequential loan growth will be in the 4.5?llpark due to idiosyncratic growth trajectory," YES Securities said.

 

Brokerages are divided on the bank's asset quality. Analysts at Motilal Oswal expect a decline in the bank's asset quality, while Nuvama expects a meaningful recovery in the same. The asset quality of the bank had worsened in the June quarter. The gross non-performing asset ratio rose to 1.48% in the June quarter from 1.42% at the end of March and from 1.39% a year ago. The bank's net non-performing asset ratio had risen to 0.34% from 0.31% at the end of March, down marginally from 0.35% a year ago. 

 

Not many brokerages have provided commentary on the bank's slippage ratio. YES Securities expects the bank's slippage ratio to increase sequentially, but it expects provisions to fall. Fresh slippages during the June quarter were up 33.43% on year at INR 18.12 billion. The provision coverage ratio of the bank at June-end was 77%, slightly down from 78% a quarter ago.

 

Commentary on margins, and the outlook for loan and deposit growth will be the key factors to monitor when the bank declares its earnings, analysts said.  At 1358 IST, shares of the bank traded nearly 2% higher at INR 2,240 on the National Stock Exchange. Its shares have risen nearly 14% since the June quarter earnings were declared. Of 21 brokerage reports on the bank available with Informist, 15 brokerages have recommended a 'buy' rating with an average target price of INR 2,317 per share. Four brokerages have recommended a 'hold' rating at an average target price of INR 2,045, while two recommended selling the stock with an average target price of INR 2,040 a share.

 

Following are the Jul-Sept earnings estimates for Kotak Mahindra Bank from 10 brokerages in descending order of the estimate of net profit:

 

Brokerage	Net interest income (in INR million)	Net profit (in INR million)
Nirmal Bang Equities Pvt. Ltd.	70,950	35,987
Anand Rathi Share and Stock Brokers Ltd.	75,094	34,637
Nuvama Wealth Management Ltd.	73,500	34,038
Emkay Global Financial Services Ltd.	72,628	33,735
Prabhudas Lilladher Pvt Ltd.	73,162	33,211
JM Financial Institutional Securities Pvt. Ltd.	71,710	32,763
Nomura Equity Research	73,300	32,700
Motilal Oswal Financial Services Ltd.	73,148	32,684
ICICI Securities Ltd.	72,844	32,260
YES Securities (India) Ltd.	75,006.	31,833
Average	73,134.20	33,384

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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