Kotak Bank share price slumps 6% on weak Q4 results, brokerage downgrades. How to trade now?

Kotak Bank share price slumped 6% during Monday's trading session after the private bank reported a 7.57% decrease in consolidated net profit, amounting to ₹4,933 crore for the March quarter of FY2024-25 (FY25), largely due to increased pressure in the microlending sector.

The bank's core net interest income increased by 5% to ₹7,284 crore in the reported quarter, while other income rose by 7% to ₹3,182 crore. Customer assets grew by 13%, although the net interest margin significantly narrowed to 4.97% compared to 5.28% in the same period last year. 

Additionally, on a consolidated basis, Kotak Mahindra Bank's total income declined to ₹27,174 crore from ₹27,907 crore in the fourth quarter of the previous fiscal year.

As per media reports, brokerage firm CLSA has changed its rating on the stock to "hold" from “underperform”, while also slightly increasing its price target to ₹2,225 from ₹2,125.

The firm has adjusted its profit forecasts for Kotak Mahindra Bank downward by 3% to 5% due to expectations of reduced Net Interest Income and increased Operating Expenditure (Opex).

Nomura has similarly downgraded its rating on the stock to "neutral" from its former "buy" rating, though it has slightly raised its price target to ₹2,200 from ₹2,110.

Nuvama has also downgraded its outlook on Kotak Mahindra Bank shares, bringing its rating down to "hold" from "buy," and increasing the price target to ₹2,350 from ₹2,040.

Technical Views

Kotak Bank share price opened at ₹2,110 apiece on the BSE, the stock touched an intraday low of ₹2,058.35 per share, and an intraday high of ₹2,058.35 per share.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Kotak Bank share price has seen a huge gap down and a follow-up selloff is seen in the morning session. “With this, prices have slipped below 50-DEMA, and may remain under pressure in the near term. Previous swing low around ₹2,000 is likely to act as next support, whereas bearish gap around ₹2,180 is resistance,” said Bhosale.

Further, Anshul Jain, Head of Research at Lakshmishree Investments, added that Kotak Bank share price rejected its all-time high of ₹2,247 over the last two weeks, forming a failed breakout. Post results, the stock witnessed a gap-down followed by profit booking and fresh short positions. It is currently testing its 50-day EMA at ₹2,070, Jain added.

“A close below this level will signal a break in the long-term uptrend, potentially triggering a deeper correction towards ₹1,999 and even ₹1,890. Sustained weakness here could invite further downside pressure,” said Jain.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.