Kotak Mahindra Bank’s stock took a significant hit on Monday, plummeting by 6% in response to its latest financial report for the March quarter of FY2024-25 (FY25). The private banking institution disclosed a 7.57% drop in consolidated net profit, which amounted to ₹4,933 crore, primarily attributed to challenges in the microlending sector. Despite this setback, the bank’s core net interest income saw a slight uptick of 5%, reaching ₹7,284 crore, while other income rose by 7% to ₹3,182 crore.

Financial Overview for Kotak Mahindra Bank

• Customer assets surged by 13%.
• However, the net interest margin faced considerable contraction, decreasing from 5.28% to 4.97% year-on-year.
• On a consolidated basis, total income fell to ₹27,174 crore, down from ₹27,907 crore in the previous fiscal quarter.

Analyst Reactions and Ratings Adjustments

In light of these results, notable brokerage firm CLSA has revised its stock rating for Kotak Mahindra Bank from “underperform” to “hold,” slightly adjusting its price target from ₹2,125 to ₹2,225. The firm has also lowered its profit forecasts for the bank by 3% to 5%, citing anticipated declines in net interest income and rising operating expenses.

Similarly, Nomura has downgraded its rating from “buy” to “neutral,” while increasing its price target from ₹2,110 to ₹2,200. Additionally, Nuvama has changed its outlook, moving from “buy” to “hold,” and raising the price target from ₹2,040 to ₹2,350.

Stock Performance Insights

At the start of trading, Kotak Bank’s share price opened at ₹2,110 on the BSE, hitting an intraday low of ₹2,058.35 and a high of ₹2,110. Analyst Rajesh Bhosale from Angel One noted that the stock experienced a significant gap down, indicating continued selling pressure. He mentioned that the stock has fallen below its 50-day exponential moving average (EMA), which suggests potential challenges ahead.

Bhosale stated, “The previous swing low around ₹2,000 could serve as the next support level, while resistance stands at around ₹2,180."

In a similar vein, Anshul Jain, Head of Research at Lakshmishree Investments, remarked that the stock had recently failed to surpass its all-time high of ₹2,247, resulting in profit-taking and the establishment of new short positions. He cautioned that a close below ₹2,070 could indicate a break in the long-term upward trend, potentially leading to further declines toward ₹1,999 and ₹1,890.

Conclusion

With the recent financial results sparking concerns among investors and analysts alike, Kotak Mahindra Bank’s stock faces a challenging landscape ahead. Traders and long-term investors should closely monitor the stock’s performance, especially in light of technical indicators and market sentiment.