Kotak Mahindra Bank's quarterly earnings report has impressed investors, leading to a surge in its shares by 5.5%. The bank reported a standalone profit of Rs 4,133.30 crore for Q4 FY24, marking an 18.22% increase year-on-year (YoY). Additionally, its net interest income (NII) for the quarter rose by 13% YoY to Rs 6,909 crore.
Despite facing regulatory constraints imposed by the Reserve Bank of India (RBI), which restricted the bank from acquiring new digital clients and issuing credit cards, Kotak Mahindra Bank remains optimistic about its financial performance. During a call with analysts, CEO Ashok Vaswani stated that the impact of RBI's directives is expected to be minimal, affecting pre-tax profits by approximately Rs 300–450 crore in fiscal year 2024-25.
Nomura and JP Morgan have upgraded their ratings on Kotak Mahindra Bank, citing favorable valuations and growth prospects. Nomura upgraded its rating from neutral to buy, setting a target price of Rs 2,040, while JP Morgan revised its rating from neutral to overweight with a target price of Rs 2,070.
Analysts believe that the bank's growth will remain higher than the industry average despite the RBI sanction. The bank's financial performance for the fourth quarter exceeded analyst forecasts, driven by higher income from core lending activities and robust loan expansion.
Moreover, Kotak Mahindra Bank's asset quality improved, with gross non-performing assets (GNPA) and net non-performing assets (NNPA) at 1.4% and 0.3%, respectively, compared to 1.7% and 0.3% in the previous quarter. Slippages during the quarter amounted to Rs 1,305 crore.
Overall, the positive quarterly results and optimistic outlook have contributed to the surge in Kotak Mahindra Bank's shares, providing investors with confidence in the bank's future performance.
