Kotak Mahindra Bank shares declined as much as 5 per cent in early trade on Monday, even as the lender reported a rise in fourth-quarter profit, with the stock reacting to mixed underlying cues and cautious commentary around growth and profitability.

The stock hit a low of ₹363 before recovering slightly to trade at ₹375.85 on the NSE, still down about 2 per cent and among the top losers in the Nifty 50.

The private sector lender reported a 13 per cent y-o-y increase in standalone net profit at ₹4,027 crore for the March quarter, supported by steady growth in net interest income and a sharp decline in provisions. While profitability came in ahead of expectations, the market appeared to factor in concerns around sustainability of margins and growth momentum.

Mixed valuations

Brokerages largely acknowledged the earnings beat but offered a mixed outlook.

Morgan Stanley retained an overweight rating with a target price of ₹500, calling Q4FY26 a good quarter at attractive valuations. The brokerage said profit after tax, NIM, net interest income and core pre-provision operating profit all beat estimates, while slippages and credit costs declined sharply. It highlighted management’s confident commentary and sees the bank as a key pick amid macro risks given earnings resilience.

BofA maintained a buy rating with a target price of ₹460, noting that profit after tax beat estimates, aided by net interest margin expansion and lower provisions. It added that asset quality and margins improved, with return on assets expanding to 2.1 per cent, and expects loan growth momentum to pick up alongside recovery in unsecured lending and lower credit costs.

Macquarie, however, maintained a neutral stance with a target price of ₹460, stating that easing credit costs should support profitability. It noted that the earnings beat was largely driven by lower credit costs and improvement in retail segments, while margins remained stable due to a better deposit profile.

Elara Capital maintained a buy rating but lowered its target price to ₹473, citing near-term uncertainties. It said the bank has been delivering improving core performance despite a challenging environment and offers a relatively safer earnings compounding story, with return on assets around 2 per cent. It also noted that valuations remain attractive among large private banks, supporting a favourable risk-reward outlook.

Meanwhile, Ambit Capital remained more cautious, maintaining a sell rating with a target price of ₹380. The brokerage flagged concerns over the bank’s ability to balance faster growth with strong underwriting, noting that a shift towards higher-yield unsecured lending could increase operating expenses and credit cost volatility. It expects return on assets to remain around 2 per cent and highlighted that excess capital may weigh on return on equity over the medium term.

Published on May 4, 2026