Synopsis:
Kotak Mahindra Bank’s Q1FY26 net profit decreased 7.6 percent QoQ and 6.76 percent YoY as a result of higher credit costs and declining margins. Brokerages are mixed despite the poor results; some anticipate improvement in the upcoming quarters, while others are cautious because of ongoing difficulties.
The shares of one of the largest private sector banks in India is in focus today, after declaring financial results for Q1FY26, where net profits fell by 6.76 percent YoY and 7.06 percent QoQ, check it out.
With a market capitalization of Rs. 3,96,022 crore, the shares of Kotak Mahindra Bank were trading at Rs. 1,992 down by 6.26 percent from its previous day close of Rs. 2124.60 per equity share.
Q1 Update
In June 2025, the Kotak Mahindra Bank reported Q1FY26 results with a moderate year-over-year performance compared to Q1FY25. The generated net interest income is Rs. 7,259 crore, up by 6.09 percent as compared to Rs.6,842 crore in Q1FY25, and down by 0.35 percent compared to Q4FY25 of Rs. 7,284, indicating a slight improvement in the operational efficiency yearly. Net Advances increased by 14 percent from Rs. 3,89,957 crore to Rs. 444,823 crore Year over Year.
Operating profit was Rs. 5,564 crore in Q1FY26, increased by 5.90 percent as compared to Rs. 5,254 crore in Q1FY25 and 1.68 percent compared to Rs. 5,472 in Q4FY25, Whereas net profit was Rs. 3,282 crore in Q1FY26, it decreased by 6.76 percent as compared to Rs. 3,520 crore in Q1FY25 and decreased by 7.60 percent QoQ from Rs. 3,552 crore in Q4FY25.
The amount of CASA deposits increased to Rs. 2,09,645 crore, which is 40.88 percent of the total deposits. The Return on Assets (ROA) decreased to 1.94 percent from 2.38 percent a year ago, while the Cost-to-income ratio decreased to 46.19 percent from 46.23 percent.
The net interest margin (NIM) reduced to 4.65 percent in Q1FY26 from 5.02 percent in Q1FY25. CASA ratio decreased from 43.4 percent to 40.9 percent from year over year. The Gross NPA was 1.48 percent in Q1FY26 as compared to 1.39 percent in Q1FY25, and the Net NPA also stood at 0.34 percent from 0.35 percent year over year, indicating the company’s credit management system.
About the Company
In February 2003, the RBI granted the first non-banking finance company in India a banking license: Kotak Mahindra Bank Ltd., formerly known as Kotak Mahindra Finance Ltd. In April 2015, the merger with ING Vysya Bank was completed. The bank has 2,154 branches and 2,927 ATMs (including cash recyclers) in India as of June 30, 2025. It also has a presence abroad in GIFT City and the DIFC in Dubai. The bank serves both retail and corporate clients in both urban and rural areas through its four main business units: consumer banking, corporate banking, commercial banking, and treasury.
Analyst outlook
Morgan Stanley maintained an Overweight rating but cut the target price from Rs. 2,650 to Rs. 2,600, citing a soft Q1 with NIM decline and higher NPL formation. They predict that Q2 will continue to be weak, but that Q3 will see an improvement as a result of deposit repricing, CRR reductions, and an improved loan mix.
Nomura lowered the target from Rs. 2,200 to Rs. 2,150 while maintaining a neutral rating. Despite the robust growth in loans and deposits, they pointed out margin weakness and growing credit costs. Additionally, they reduced the FY26–28 EPS projections by 3–7 percent.
Despite reducing its target to Rs. 1,950, Bernstein kept its Market-Perform rating. They pointed out that despite 14 percent loan growth, RoA fell below 2 percent due to severe NIM compression and high credit costs.
With a target price of Rs. 2,550, Jefferies maintained a Buy rating. Despite admitting to poor Q1 results, they anticipate that future earnings will be supported by lowering deposit rates. Although they made only minor adjustments to FY27–28, they reduced FY26 EPS by 5 percent and think the stock is fairly priced in relation to competitors like ICICI and HDFC Bank.
Written by: Akshay Sanghavi
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