Morgan Stanley bets on Kotak Mahindra Bank, expects shares to jump 31%

Morgan Stanley has initiated coverage on Kotak Mahindra Bank with an ‘Overweight’ rating and a target price of ₹2,600 per share, implying a potential upside of approximately 30.6% from Monday’s closing of ₹1,991.60.

The global brokerage expects Kotak to be best positioned to generate growth in an improving economic environment, underpinned by a well-diversified loan book spanning commercial banking, vehicle financing, and unsecured loans.

Incremental spreads are likely to improve, supporting faster loan growth, while core PPoP and EPS growth are projected to return to 18–20% from fiscal year 2027.

Kotak Mahindra Bank shares were trading at ₹1,995.30 on the NSE as of 02:26 pm, after touching an intraday high of ₹2,015.00.

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In the June quarter, the bank reported a net profit of ₹3,281.7 crore, below Street estimates of ₹3,442 crore and 57.5% lower than the previous year’s ₹6,250 crore. Net interest income rose 6.1% sequentially to ₹7,249 crore, close to estimates of ₹7,293 crore.

Gross non-performing assets increased to ₹6,637.7 crore from ₹6,134 crore sequentially, with a gross NPA ratio of 1.48% versus 1.42%. Net NPAs rose to ₹1,531 crore from ₹1,343 crore, translating to a net NPA ratio of 0.34%, up from 0.31%.

Provisions were higher at ₹1,207.76 crore compared with ₹909.38 crore sequentially, reflecting a cautious approach amid changing asset quality.