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Shares of Kotak Mahindra Bank rose more than 2 per cent to reach a fresh 52-week high of Rs 1,986 per share on February 13; Should you invest?
The restrictions on Kotak Mahindra Bank were initially imposed on April 24, 2024.
Shares of Kotak Mahindra Bank rose more than 2 per cent to reach a fresh 52-week high of Rs 1,986 per share on February 13, after the Reserve Bank of India lifted the restrictions imposed on the bank. The RBI had previously barred Kotak Mahindra Bank from onboarding new customers through its online platforms and issuing new credit cards, starting from April 24, 2024.
The Mumbai-based lender was directed to cease acquiring new customers via its online and mobile banking channels and issuing fresh credit cards.
Brokerages have responded positively to the development, viewing it as a significant growth catalyst.
Morgan Stanley reaffirmed its “overweight” rating on Kotak Bank, setting the highest target price at Rs 2,290 per share. The brokerage believes that the lifting of the restrictions will boost growth in unsecured lending and enhance the bank’s ability to manage margins more effectively than its competitors.
JPMorgan shared a similar optimistic outlook, maintaining its “overweight” rating with a target price of Rs 2,100. It highlighted the potential for stronger unsecured loan growth in the medium to long term. “A revamped digital app and a potential peak in credit card slippages across the system could further accelerate Kotak Mahindra Bank’s customer acquisitions,” noted JPMorgan analysts.
Meanwhile, UBS revised its forecasts, increasing Kotak Bank’s FY26-27 EPS estimates by 3-4% and expecting a gradual acceleration in new deposit customer acquisitions in H1FY26. While maintaining a “neutral” rating, UBS raised its target price from Rs 1,950 to Rs 2,100 per share.
In the October-December quarter, Kotak Bank’s credit card volumes saw a 2% quarter-on-quarter (QoQ) decline, totaling Rs 14,117 crore. However, the YoY growth was modest at 2%, compared to Rs 13,881 crore in the same period last year.
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