Kotak Mahindra Bank shares drop 4.7% in pre-market trading

Kotak Mahindra Bank shares drop 4.7% in pre-market trading

Kotak Mahindra Bank shares have experienced a significant drop of 4.7% in pre-market trading on July 2, 2025, following the release of the bank's earnings report for the quarter ended June 30, 2025. The bank reported a standalone net profit of Rs 3,282 crore for the first quarter of FY26, marking a 7% year-on-year decline from Rs 3,520 crore in the same period last year [1].

The drop in profit was primarily attributed to a sharp rise in provisioning and contingencies, which surged by 109% year-on-year to Rs 1,208 crore. Net interest income (NII) rose by 6% to Rs 7,259 crore, while the net interest margin (NIM) remained robust at 4.65%. However, the bank's net interest margin (NIM) experienced a steep 32 bps QoQ contraction to 4.7% due to lending rate cuts and increased credit growth [1].

Analysts have mixed views on the bank's performance. Nomura has maintained a 'neutral' rating on Kotak Mahindra Bank with a target price of Rs 2,150 per share, citing asset quality concerns and margin pressure [1]. Morgan Stanley, on the other hand, maintained an 'overweight' rating with a target price of Rs 2,600 per share, noting that the bank's growth outpaced the industry but was disappointed by the decline in NIMs and elevated formation of non-performing loans [1].

The bank's management expects NIM to bottom out by Q2FY26, supported by the full transmission of rate cuts, deposit repricing, and CRR benefits, with a recovery likely from H2. Growth in the unsecured segment is expected to pick up gradually as the lending environment improves, aiding both growth and margin trajectory [1].

Investors should closely monitor the bank's performance and the broader economic conditions that may impact its financial health. The bank's stock price is currently trading at Rs 2,170.80, down from its previous close of Rs 2,179.40 [2].

References:
[1] https://www.tradingview.com/news/moneycontrol:a772ffde1094b:0-kotak-mahindra-bank-shares-in-focus-as-net-profit-slips-7-yoy-should-you-buy-sell-or-hold/
[2] https://economictimes.indiatimes.com/kotak-mahindra-bank-ltd/stocks/companyid-12161.cms