1 week Ago
Private sector lender Kotak Mahindra Bank had a rocky ride in 2024, emerging as one of the underperformers in the Nifty Bank pack. Despite an 11% surge in the banking index, Kotak’s stock dropped over 4% over the past year. However, the bank's recent performance suggests it is ready to make a comeback.
With positive returns in seven of the last 12 months, Kotak has started 2025 on a high note, adding 3% in the first two trading sessions of January. This rebound is fueled by brokerage upgrades from Citi and Jefferies, who raised the stock's rating to 'buy' from 'hold.' As of its last close, Kotak Bank's stock is just 6% shy of its record high of ₹ 1,953, achieved in September 2024, and has already gained 19% from its 52-week low in May.
Investors are now contemplating whether Kotak Mahindra Bank will continue with its bullish momentum in 2025 or remain flattish. Here's a look at the stock's technical and fundamental analysis: Technical Analysis The recent price action has reinforced a bullish outlook for Kotak Mahindra Bank, with technical analysts projecting a potential target price of ₹ 2,000 for the stock. Rajesh Palviya, SVP of Technical and Derivative Research at Axis Securities, noted, “The stock has shown a strong upward movement, decisively breaking through the resistance level of 1810 over the past couple of months on a closing basis.
This breakout, supported by substantial trading volumes, indicates growing market participation.” Currently, the stock is positioned above its 20, 50, 100, and 200-day Simple Moving Averages (SMA), further solidifying the bullish trend. Additionally, both the daily, weekly, and monthly Relative Strength Index (RSI) indicators are in positive territory, signalling continued strength in the stock, Palviya added.
Rajesh Bhosale, Equity Technical Analyst at Angel One, highlighted the positive momentum in the stock this week, following a breakout above the recent range of 1720–1820. This move has resulted in a bullish breakout from a channel pattern, confirmed by a strong bullish candle on the daily chart, along with robust volumes. Bhosale further noted that the stock has surpassed its prior high near ₹ 1920, reinforcing the bullish outlook.
Looking ahead, Bhosale expects ₹ 1920 to act as the first upside resistance level, as the stock has breached the 61.8% retracement level from the previous high of ₹ 1920. This could pave the way for a move towards ₹ 2000.
On the downside, he sees the cluster of support around ₹ 1740, formed by major moving averages, providing an immediate cushion for the stock. Fundamental Outlook Foreign brokerage Citi has upgraded Kotak Mahindra Bank Ltd to a ‘Buy’ from ‘Neutral,’ raising the target price to ₹ 2,070 from ₹ 1,940. The brokerage has also placed the stock under a 90-day positive catalyst watch, citing the potential lifting of regulatory restrictions as a significant trigger for the bank's stock performance.
Citi expects the bank to sustain its loan growth momentum, particularly in the personal loan segment, supported by improving delinquency trends. The brokerage noted that credit cost expectations have already been factored into higher levels and sees medium-term growth potential with a relatively low beta. Meanwhile, Jefferies also upgraded Kotak Mahindra Bank's rating from Hold to Buy, raising the price target to ₹ 2,120 from ₹ 2,080, citing improved alignment of valuations with potential.
The bank's shares, stagnant for 15 months, are valued at 1.7 times FY26 PB and 13 times FY26 PE, offering a fair discount to ICICI Bank, said the global brokerage. Jefferies revised credit growth forecasts, reducing FY26-27 earnings estimates by 2-4 per cent but expects a 15 per cent CAGR in loans over FY25-27.
With credit costs projected at 75-80 basis points for FY26-27, Jefferies finds Kotak Mahindra Bank an attractive investment at current valuations. Earnings Performance Kotak Mahindra Bank reported a 5 per cent year-on-year (YoY) increase in standalone profit after tax (PAT) for the quarter ended September 2024, reaching ₹ 3,344 crore compared to ₹ 3,191 crore in Q2FY24. The bank’s net interest income (NII) rose 11 per cent YoY to ₹ 7,020 crore, up from ₹ 6,297 crore in the corresponding period of the previous financial year.
However, its net interest margin (NIM) for Q2FY25 stood at 4.91 per cent, declining from 5.22 per cent in Q2FY24.
On the asset quality front, as of September 2024, the bank’s gross non-performing asset (GNPA) ratio increased to 1.49 per cent, compared to 1.72 per cent a year earlier.
Net NPA also rose to 0.43 per cent from 0.37 per cent during the same period.
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 taking any investment decisions..
