Kotak Mahindra Bank share price rallies over 9% after Q3 results. Should you buy, sell or hold?

Kotak Mahindra Bank share price jumped over 9% in early trade on Monday after the private lender reported decent earnings for the third quarter of FY25. Kotak Mahindra Bank shares rallied as much as 9.16% to ₹1,919.75 apiece on the BSE.

Kotak Mahindra Bank reported a net profit of ₹3,305 crore in the fiscal third quarter ended December 2024, a growth of 10% from ₹3,005 crore in the same period last year.

The bank’s Net Interest Income (NII), the difference between the interest earned and the interest paid, in Q3FY25 increased by 10% year-on-year (YoY) to ₹7,196 crore. Net interest margin (NIM) stood at 4.93% for the December quarter.

However, asset quality of Kotak Mahindra Bank in Q3FY25 remained under pressure as gross non-performing assets (GNPA) rose to 1.50% from 1.49% in the September quarter, while the Net NPAs were at 0.41% as against 0.43% QoQ.

Analysts' Review

“Kotak Mahindra Bank has delivered a healthy operating performance amid challenging macro conditions, showcasing its resilience and strategic foresight. The anticipated reversal of the ban on card issuance and the reinvigoration of customer onboarding via its advanced online and mobile banking channels are set to act as powerful near-term catalysts. These developments not only will support business growth but will also be pivotal to maintaining healthy margins and revenue growth led by the recovery in synergistic cross-selling avenues,” Motilal Oswal Financial Services said in a note.

It marginally raised earnings and estimates Kotak Mahindra Bank to deliver FY26E RoA and RoE of 2.2% and 13.5%. After being ‘Neutral’ on the Kotak Mahindra Bank stock for almost four and a half years, MOFSL now upgraded its rating to ‘Buy’ and raised the target price to ₹2,100 per share.

“Kotak Mahindra Bank reported relatively better growth (15% YoY) and asset quality performance (lower slippages QoQ/flat GNPA ratio), amid the uncertain and tough environment. The bank continues to engage with the RBI on lifting the embargo on Cards and digi-liability banking, but resisted from sharing any timeline, as the approval is already delayed (which has possibly prompted the CTO resignation),” said Anand Dama, Senior Research Analyst at Emkay Global Financial Services Ltd.

The brokerage firm cut its earnings estimates by 2-4%, factoring in some growth moderation and elevated LLP, but raised its target price for Kotak Mahindra Bank shares to ₹1,750 apiece. However, it retained ‘Reduce’ rating on the stock.

Technicals

Kotak Mahindra Bank shares are witnessing a strong buying action on Monday and the stock has jumped nearly 10% amid heavy volumes. Around 64 lakh Kotak Mahindra Bank shares changed hands on stock exchanges today, as against its one week average of 35 lakh shares.

“Kotak Mahindra Bank stock is approaching its September 2024 swing high of ₹1,930 - 1,940 levels. If the stock crosses ₹1,940 level, we may see a rally towards ₹2,000 - 2,040 levels. Traders having a position can hold the stock with a stop loss at its key support of ₹1,870, for a target of ₹2,000 - 2,030,” said Rajesh Palviya, SVP - Technical and Derivatives Research, Axis Securities.

At 9:30 AM, Kotak Mahindra Bank shares were trading 9.06% higher at ₹1,917.90 apiece on the BSE.

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