Kotak Mahindra Bank Share Price Target 2026: Emkay recently met the Managing Director and CEO of Kotak Mahindra Bank (KMB), Ashok Vaswani, in a small group interaction. According to the brokerage, KMB is entering a new phase of growth, with the CEO indicating that the initial consolidation period is now largely behind the bank.
The brokerage noted that the stock is attractively valued at 1.5x June 2027 core price-to-book value and is expected to deliver steady compounding going forward. However, it does not see any immediate catalysts for significant outperformance. Emkay believes the bank would need to achieve around 22-23% growth to structurally address the return-on-equity (ROE) drag arising from excess capital, though such growth appears unlikely in the near term. The brokerage expects the bank to deliver a healthy 2% return on assets (RoA) during FY27-FY29, supported by improved growth, operating leverage, and lower credit costs.
On the front foot
According to the brokerage, most legacy issues are now behind the bank. The technology-related concerns that led to regulatory restrictions have been addressed, following a period of aggressive investment in technology infrastructure. The catch-up with peers is largely complete, and operating leverage was reflected in the decline in cost-to-assets ratio during FY27.
The bank has also transitioned from a product-centric approach to a cross-selling model focused on four segments-affluent, mass, SME and corporate. Organizational structures have been realigned to support this strategy, with benefits beginning to emerge.
In addition, significant changes in senior leadership resulting from age-related retirements have largely been completed, bringing stability to the management team.
Credit growth guidance remains at 1.5x-2x nominal GDP growth, translating to roughly 15-20%, as management views this as the optimal balance between credit quality, deposit growth and profitability.
The bank is unlikely to accelerate lending growth solely to deploy excess capital. Retail and SME segments remain in preferred growth areas over the medium term, given the challenges around risk-adjusted profitability in corporate lending.
On mergers and acquisitions, management indicated a preference for portfolio acquisitions rather than entity-level deals. The CEO reiterated that previous acquisitions have yielded positive outcomes in terms of customer retention and cross-selling opportunities.
The long-term aspiration remains to rank among the top three private sector banks in India by profitability.
The affluent segment continues to contribute strongly to low-cost deposit mobilisation and liquidity coverage ratio (LCR). Meanwhile, 811 accounts now contribute 13% of low-cost deposits and are becoming increasingly significant.
The bank is also focusing on current account deposits from the SME segment, which management sees as a major long-term opportunity. Digital customer acquisition and servicing, particularly in the mass-market segment, will remain key priorities.
Management views a structural decline in the cost-to-assets ratio as the primary driver for future RoA improvement. According to the CEO, the bank can sustain mid-teen growth while requiring only limited expansion in branches and workforce.
Further leveraging technology for sales and customer service remains an ongoing journey and is expected to be a key enabler of efficiency gains. Management does not see any clear directional trend in margins at present, as improved spreads from deposit repricing are being offset by deleveraging. However, pricing pressure on loan yields is showing signs of easing.
Kotak Mahindra Bank Q4 Results FY26
Kotak Mahindra Bank in May reported 10 per cent rise in consolidated net profit at Rs 5,423 for the fourth quarter of financial year 2025-26. In the year-ago period, the profit stood at Rs 4,933 crore. On a standalone basis, it reported a 13 per cent year-on-year rise in net profit at Rs 4,027 crore.
Core net interest income of the bank increased 8 per cent to Rs 7,876 crore from Rs 7,284 crore a year ago.
Net interest margin improved to 4.67 per cent from 4.54 per cent in December quarter. However, it fell on a yearly basis, from 4.97 per cent in Q4FY25.
Net advances increased 16 per cent year-on-year to Rs 4.96 lakh crore as on March 31, 2026.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
