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Kotak Mahindra Bank (KMB) reported a solid Q2FY26 performance with industry-beating credit growth, though profitability was marred by margin compression and mark-to-market (MTM) losses. Emkay Research, while raising the target price slightly by 5% to ₹2,050 (from ₹1,950), retained a ‘Reduce’ rating due to what it called “rich valuations for sub-optimal return ratios.”

Strong Loan Growth but NIM Slips

KMB’s credit book grew 16% year-on-year and 4% sequentially, with corporate lending doing most of the heavy lifting, up 17.6% YoY and 6% QoQ. Retail and SME segments also recorded double-digit growth. However, the bank’s net interest margin (NIM) fell by 11 basis points (bps) quarter-on-quarter to 4.5%, largely due to lower investm

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