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Informist, Wednesday, Jan. 21, 2026

 

By Shruti Nair

 

MUMBAI – Kotak Mahindra Bank Ltd. is expected to report moderate growth in its net profit for the December quarter as the fall in yield on advances outpaces the fall in cost of deposits. The bank's net interest income is expected to rise only moderately on quarter, despite strong loan growth in the reporting quarter.

 

The bank is expected to report a net profit INR 34.77 billion for the December quarter, up over 5% on year. The highest estimate for the bank's net profit is INR 36.28 billion by Elara Securities (India) Pvt. Ltd. and the lowest estimate is INR 33.41 billion by Emkay Global Financial Services Ltd. Sequentially, the bottom line is expected to increase nearly 7%. The sequential increase in net profit is on account of declining credit costs, according to Prabhudas Lilladher Pvt. Ltd.

 

The bank's net interest margin is expected to decline 30-47 basis points on year, from 4.93% in the year-ago quarter, according to estimates by five brokerages. However, brokerages are divided on the movement in the bank's sequential net interest margin. Four estimates see the margin increasing 2-9 bps sequentially from 4.54% in the September quarter.

 

The net interest margin would increase due to the Reserve Bank of India's reduction of banks' cash reserve as well as repricing of deposits, according to Motilal Oswal Financial Services Ltd. The bank's net interest margin is likely to benefit from reducing rates and on deposits and borrowings and due to the shorter maturity of some of these liabilities, Elara Securities said, though it did not provide details about these.

 

Prabhudas Lilladher expects the cut in banks' cash reserve ratio to offset the implications of the repo rate cut and keep the net interest margin flat from the trailing quarter.

 

Conversely, the margin is expected to decline 3-4 bps, according to ICICI Securities Ltd. and Emkay Global. The sequential decline in the margin is due to the bank's moderate net interest income, according to YES Securities.

 

The bank's net interest income is expected at INR 75.53 billion, up 5% on year and over 3% on quarter, according to the average of estimates from 11 brokerages. The highest estimate is INR 77.44 billion by Nirmal Bang Equities Pvt. Ltd., while the lowest estimate is INR 74.45 billion by ICICI Securities.

 

The bank's net interest income is expected to grow only modestly despite strong on-year loan growth in the December quarter. The bank's net advances were INR 4.8 trillion as on Dec. 31, up nearly 16% on year. Sequentially, the increase in net advances will be nearly 4%. The bank's total deposits were INR 5.43 trillion, up nearly 15% on year and less than 3% on quarter as on Dec. 31.

 

Growth in the bank's net interest income is expected to be slower than loan growth due to the fall in yield on advances outpacing the fall in the cost of deposits, according to YES Securities. However, Systematix Shares and Stocks (India) Ltd. expects the fall in yield on advances to be completely offset by the fall in the cost of deposits.

 

The bank's gross non-performing asset ratio is expected to fall 3-9 bps on quarter from 1.39% in the September quarter, according to analysts. Stress in the retail commercial vehicle segment is likely to affect asset quality, Motilal Oswal said. However, Prabhudas Lilladher expects the gross non-performing assets ratio to rise 2 bps. Brokerages estimate a decline of 9-20 bps in the gross non-performing assets ratio from 1.50% in the year-ago quarter.

 

The bank's provisions are estimated at INR 8.93 billion, down over 5% from INR 9.47 billion in the September quarter. Systematix Securities, however, is an outlier and anticipates provisions will be flat on quarter due to higher slippages in agricultural loans. On year, the bank's provisions are expected to increase over 12%.

 

The bank's loan slippages are expected to decline 2-5% from INR 16.29 billion in the trailing quarter, according to ICICI Securities and Nuvama Wealth Management Ltd. A marginal decline is expected by YES Securities. However, Systematix Securities sees an increase in slippages due to higher slippages in agricultural loans.

 

The bank's credit cost is expected to decline 3-9 bps from 0.68% in the year-ago quarter, according to estimates by five brokerages. The credit cost may see a steeper fall of 9-14 bps from 0.79% in the trailing quarter.

 

The bank did a 5-for-1 stock split on Jan. 14 and the face value of the shares is now INR 1 each.

 

Shares of the bank closed at INR 423.80 on the National Stock Exchange on Tuesday, down slightly. The shares are down nearly 1% since the bank reported its September quarter earnings on Oct. 25.

 

Of the 15 brokerage reports on the bank available with Informist, 11 have a 'buy' or equivalent recommendation on the stock with an average target price of INR 509 per share. This is over 20% higher than the current market price. Two brokerages have a 'hold' or equivalent recommendation with a target price of INR 428 and two have a 'sell' or equivalent recommendation with a target price of INR 415 per share. The bank will detail its December quarter results on Saturday.

 

Following are the December quarter earnings estimates for Kotak Mahindra Bank from 11 brokerages in descending order of the estimate of net profit in INR billion:

 

Brokerage firm	Net interest income	Net profit
Elara Securities (India) Pvt Ltd	75.88	36.28
Motilal Oswal Financial Services Ltd	76.66	35.45
Mirae Asset Sharekhan Ltd	75.66	35.36
JM Financial Institutional Securities Pvt Ltd	75.27	35.18
Nirmal Bang Equities Pvt Ltd	77.44	35.13
Nuvama Wealth Management Ltd	74.70	34.80
Prabhudas Lilladher Pvt Ltd	74.76	34.57
Systematix Shares and Stocks (India) Ltd	75.16	34.32
YES Securities (India) Ltd	75.65	34.11
ICICI Securities Ltd	74.45	33.89
Emkay Global Financial Services Ltd	75.14	33.41
Average	75.53	34.77

 

End

 

Edited by Avishek Dutta

 

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