Kotak Mahindra Bank (KMB) is planning to grow its balance sheet at about 1.5‑2 times the pace of India's GDP while focusing on retail and small‑business customers.
Growth plan and earnings outlook
The bank expects its net interest margins (NIM) to stay roughly the same for now because of short‑term rate quirks, but overall net interest income (NII) should keep rising.
- Margins may be flat in the third quarter of FY26 due to temporary yield distortions.
- The recent 25‑basis‑point rate cut is likely to improve funding costs only from the fourth quarter of FY26 onward.
- New “ActivMoney” sweep deposits and later‑maturing term deposits should gradually lower funding costs.
Profitability targets
Motilal Oswal projects the bank will achieve a return on assets (RoA) of about 2% and a return on equity (RoE) of 12.7% by fiscal year 2027.
Investment recommendation
The analysts keep a “Buy” call on KMB with a target price of ₹2,500 per share, which is roughly 2.5 times the expected earnings for FY27 plus a ₹775 premium for subsidiaries.
What this means for you
Steady earnings growth and a plan to lower funding costs suggest the bank could offer stable returns for retail investors, even if short‑term margin swings cause some noise.
Remember, this is just an opinion, not a prediction. Always do your own research or consult a certified advisor before making any investment decisions.