HSBC turned more constructive on the bank following greater clarity on the CEO appointment, while also seeing stronger loan growth and earnings per share (EPS) growth ahead.
The brokerage raised its EPS estimates for Kotak Mahindra Bank by 1-14% for FY2027-FY2029, factoring in stronger loan growth and stable net interest margins (NIMs).
HSBC also said a potential repo rate hike could present an upside risk to its estimates.
The brokerage expects the bank’s improving growth trajectory, alongside greater clarity on leadership, to support its outlook for the stock.
Other brokerages also maintained a positive view on Kotak Mahindra Bank following its second-quarter performance. Goldman Sachs reiterated its ‘Buy’ rating and raised its target price to ₹540 per share, while Citi retained its ‘Buy’ call with a target of ₹465.
Citi said the bank delivered a significant improvement in balance-sheet momentum during the second quarter, with strong FCNR(B) deposit mobilisation providing an additional boost.
Gross advances grew 24.7% year-on-year and 12.7% sequentially, ahead of Citi’s estimates of 20.9% and 9.2%, respectively. Excluding the impact of $1.68 billion in FCNR(B)-linked lending, core advances growth stood at 21.6% year-on-year and 9.5% sequentially, according to the brokerage.Goldman Sachs said organic loan growth accelerated to 19% from 15% in the previous quarter, while strong FCNR(B) flows supported deposit growth.
The brokerage also highlighted greater clarity on leadership, a strong liquidity position at the bottom of the rate cycle and the potential for faster loan growth, including through unsecured lending.
Goldman Sachs expects profitability and earnings to improve, which could support both earnings growth and a re-rating of the stock. It has also raised its earnings estimates to reflect stronger-than-expected deposit flows and a larger and faster rate-hike cycle.
At 15 times its FY2028 price-to-earnings multiple, based on an estimated 19% EPS growth, Goldman Sachs said Kotak Mahindra Bank’s valuation remains attractive.