Kotak Bank Results: Stock Drops 5% After Mixed Q3 Performance, Should You Buy or Sell?

Synopsis: Kotak Bank shares fell 5% after mixed Q3 results, as margin pressure and profitability concerns led brokerages to adopt a cautious outlook despite stable asset quality.

The shares of this company, which provides a wide range of financial solutions, including savings/current accounts, loans, credit cards, and digital-first banking, are in focus following its Q3 results announcement.

With a market capitalization of Rs 4,02.146 crore, Kotak Mahindra Bank Ltd’s shares today made a day low of Rs 400.55, down by 5.12 percent from its previous day’s close price of Rs 422.2 per share. The shares of the company have given a return of 18.22 percent over the last five years.

Results Highlights

QoQ view: The bank reported a NII of Rs 7,565 crore, up 3 percent QoQ in Q3 FY26, and a PAT of Rs 3,446 crore, up 6 percent QoQ in Q3 FY26. This was accompanied by a slightly improved GNPA of 1.30 percent in Q3 FY26 from 1.39 percent in Q2 FY26, while NNPA at 0.31 percent in Q3 FY26 reduced by 1 bps from the previous quarter. Net advances stood at Rs 4,80,673 crore in Q3 FY26, up 4 percent QoQ.

YoY view: The bank reported a NII of Rs 7,565 crore, up 5 percent YoY in Q3 FY26, and a PAT of Rs 3,446 crore, up 4 percent YoY in Q3 FY26. This was accompanied by a slightly improved GNPA of 1.30 percent in Q3 FY26 from 1.50 percent in Q3 FY25, while NNPA at 0.31 percent in Q3 FY26 improved compared to Q3 FY25. Net advances stood at Rs 4,80,673 crore in Q3 FY26, up 16 percent YoY.

The probable factors that led to the bank’s shares decline: NIM fell to 4.54 percent in Q3 FY26 from 4.93 percent in Q3 FY25, while ROE moderated to 10.68 percent in Q3 FY26 from 11.63 percent in Q3 FY25, and ROA slipped to 1.89 percent in Q3 FY26 from 2.10 percent in Q3 FY25. This was followed by an increase in the cost-to-income ratio to 48.3 percent on both a YoY and QoQ basis

Brokerage View

Citi maintained a Buy rating on Kotak Bank with an unchanged target price of Rs 513 (upside of 21 percent from the previous close), citing stable valuation despite near-term earnings downgrades following mixed Q3 results and limited margin upside.

Citi highlighted flat NIMs with credit costs contained below 70 bps. Asset quality improved with moderating slippages, and unsecured stress is largely behind, although the retail CV segment continues to remain under watch.

Loan growth is driven by SME, business banking, and mortgages. However, near-term NIM upside is capped due to deposit repricing, leading Citi to cut FY26/FY27/FY28 earnings by 7 percent/2 percent/1 percent.

Elara Capital upgraded Kotak Bank to Buy and raised its target price to Rs 511 from Rs 495 (upside of 21 percent from the previous close), reflecting confidence in improving fundamentals despite the stock’s post-Q3 decline.

The brokerage noted steady operational performance with healthy loan growth. Funding cost benefits are supporting margins, while asset quality trends continue to improve gradually after a challenging phase.

Earnings estimates remain broadly unchanged, indicating stable profitability expectations. The target price hike was driven by a Sum of the Parts (SoTP) roll-forward, reinforcing Elara’s positive medium-term outlook.

Kotak Mahindra Bank is a diversified financial services group providing a wide range of banking and financial services, including Retail Banking, Treasury and Corporate Banking, Investment Banking, Stock Broking, Vehicle Finance, Advisory services, Asset Management, Life Insurance, and General Insurance.

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