Kotak Mahindra Bank shares gain 10% in two months amid broader market decline

Analysts attribute the outperformance to a combination of strong loan growth, improved asset clarity on leadership, and expectations of an earnings recovery. Abhinav Tiwari, Senior Research Analyst at Bonanza, noted the stock started from a weak base after underperforming the banking sector, creating room for a re-rating once positive triggers emerged.

A key catalyst was the RBI’s approval of Anup Saha as MD and CEO for a three-year term starting January 2027. Tiwari said the market views Saha as a growth-oriented leader due to his consumer finance background, reducing uncertainty around succession.

Strong organic loan growth also played a significant role. Even after excluding the impact of FCNR(B) deposits, advances grew around 21% year-on-year, up from 15% in Q1 FY27, indicating underlying momentum. Around 63% of the bank’s loans are linked to external benchmarks, making it sensitive to interest rate changes.

Charmi Shah, Business Head at Wealth1, highlighted the bank’s stronger-than-expected Q2 business update. End-period net advances rose about 25% year-on-year to ₹ 5.77 lakh crore, while average advances increased around 22%. Deposits grew approximately 23% to ₹ 6.51 lakh crore, with CASA deposits up about 11%.

Goldman Sachs raised its target price for Kotak Mahindra Bank to ₹ 540 following the business update, according to Shah.

Asset quality has also improved. In Q1 FY27, standalone profit increased 26% to ₹ 4,123 crore. Gross NPA improved to 1.18% from 1.48% a year earlier, while net NPA stood at 0.27%. Annualised credit cost declined to 0.46% from 0.93%, and slippages fell 27% year-on-year. Shah said lower provisions supported profitability despite a slight decline in net interest margin (NIM) to 4.53% from 4.65%.

Shah added that the stock’s valuation starting point was relatively undemanding compared to historical levels, as prior underperformance had already reflected concerns about deposits and retail growth.

From a technical perspective, Sudeep Shah, Vice President – Technical and Derivatives Research at SBI Securities, said the stock is trading near its previous swing high of ₹ 429 on the daily chart. The RSI is rising, indicating improving bullish momentum, and the stock is trading above key short- and long-term moving averages. The ₹ 410–₹ 415 zone is seen as an important support area.

As long as the stock sustains above this level, the uptrend could extend further, according to Sudeep Shah.

The recent rally reflects a fundamental re-rating driven by stronger balance-sheet growth, improving asset quality, resolution of CEO succession uncertainty, and a valuation that had already factored in several concerns.