MOFSL has retained its 'Buy' rating on Kotak Mahindra Bank Ltd (KMB) after meeting the bank management led by MD & CEO Ashok Vaswani and group CFO Devang Gheewalla. The brokerage said liability franchise remained a key strategic focus as it sees the growth trends getting broad-based, with credit cost likely to normalise going ahead. 

MOFSL said KMB continued to pursue a calibrated growth strategy, with the bank reiterating its objective of growing advances at 1.5-2 times nominal GDP growth while maintaining prudent risk standards. It noted that the average net advances grew 16.2 per cent YoY in FY26, supported by strong momentum in SME and mortgage businesses, both of which delivered growth of 18 per cent YoY cent.

"KMB has delivered healthy growth across advances and deposits while maintaining strong asset-quality metrics and one of the highest capital buffers in the sector. The bank’s strategic focus on affluent banking, SME lending, and digital customer acquisition provides a long runway for sustainable growth, though execution on liability mobilization and cross-sell remains critical," MOFSL said.

The domestic brokerage noted that improving credit costs, stable asset quality, and continued operating leverage should support KMB's earnings growth over the medium term.

MOFSL said Kotak Bank is targeting a business model capable of generating high-teen return on equity (RoE) over time, aided by contributions from subsidiaries, while maintaining prudent risk standards and strong capital buffers. The brokerage suggested a target price of Rs 470 on KMB.

Kotak Bank has identified four strategic customer segments: Private Banking & Solitaire, Core India, SMEs, and Corporate/Institutional Banking, and is building differentiated propositions around each segment. 

"The SME franchise remains a key growth driver, with growth healthy at 19% in FY26. Unsecured retail growth has started improving sequentially, with disbursements gradually recovering, while the unsecured mix remains stable at 9 per cent of advances," MOFSL said.

It said the Kotak management remained focused on profitable and sustainable growth rather than maximising balance sheet expansion, believing that excessive growth could dilute returns and impact underwriting standards. 

MOFSL said the Kotak management remained confident that digital acquisition can continue to drive granular liability growth, while branch expansion from 2,276 currently to 3,500 branches over the next three to five years will further strengthen franchise penetration.