Kotak Mahindra Bank (KMB IN) – Q2FY26 Result Update – PL&CC pick-up/stress reduction key to re-rating – BUY
Published on 26 Oct 2025
KMB saw a mixed quarter. Core PAT was a 5.3% beat as opex was 6.9% below PLe, however, despite credit costs declining QoQ from 115bps to 92bps, they were elevated due to write-offs. Stress has been resolved in PL, reducing in MFI and gradually falling in CC. Retail CV continues to see stress. Loan growth was healthy at 4.0% QoQ mainly driven by corporate, housing/SME. Recovery in PL/CC has been slower as combined growth was -1.5% QoQ while peers like AXSB/ICICIB/HDFCB saw better growth at 4.2%/3.6%/1.9%. Opex continues to remain muted driven by automation and lower acquisition cost due to lesser CC volumes; however, we expect opex growth to normalize to 16% in FY27/28 vs 3.7% in FY26. Acceleration in unsecured loan growth and decline in credit costs remain key levers to re-rating. We keep multiple at 2.3x but increase TP to Rs2,480 from Rs2,350 as we roll forward to Sep’27 core ABV. Retain ‘BUY’.
