Kotak Bank Share Price Falls | Q1 Results & Market Outlook

Kotak Mahindra Bank’s share price fell over 6% post Q1 FY26 results due to a 7% YoY drop in net profit and elevated provisions. Here’s the full analysis on stock trends, broker views, and investor guidance.

Kotak Mahindra Bank Share Price Falls Sharply After Q1 Earnings Miss

On July 28, 2025, Kotak Mahindra Bank shares dropped 6.5%, slipping to ₹1,986–1,977 amid investor concern over a muted Q1 FY26 performance . The decline triggered broader weakness among private banks and tipped financial indices lower globally .

Q1 FY26 Earnings: NIM Squeeze and Rising Provisions

Profit and Margins

Kotak reported a 7% YoY decline in standalone net profit—₹3,282 crore in Q1 2026, down from ₹3,520 crore a year ago (adjusted for one-time gains). This marked a 47.5% drop when including the prior year’s ₹2,730 crore insurance divestment gain .

Net interest income rose by 6% YoY to ₹7,259 crore, but net interest margin contracted to 4.65% from 5.02% .

Asset Quality & Provisioning

Gross NPAs rose to 1.48% from 1.39% YoY, driven by stress in MFI and retail CV segments. Provisions surged over 100% to ₹1,208 crore . Despite this, domestic advances recorded 14% YoY growth, and total deposits increased by 13% .

H2: How Did the Stock React?

TCS shares slumped between 5%–7% intraday . MIcro- and retail investors sold off in response to downgrades and bearish brokerage outlooks, making Kotak the biggest drag on bank and financial indices that day.

Brokerages Outlook & Revised Targets

Emkay Global reaffirmed a “Reduce” rating, retaining target price at ₹1,950.
Nomura assigned a “Neutral” rating with a revised target of ₹2,150, citing margin compression and low return ratios.
Bernstein expects RoA to settle below 2%, forecasting limited near-term upside. Yet, Jefferies maintained a “Buy” call and TP of ₹2,550 .

Financial Snapshot Q1 FY26

Net Interest Income: ₹7,259 cr (+6%)
Total Income: ₹10,339 cr (+6%) 
Operating Profit: ₹5,564 cr (+6%)
Provisions: ₹1,208 cr (+109%)
PAT (adjusted): ₹3,282 cr (–7%) 
ROE: ~11% (Adjusted ROE ~11.5%)
CASA Ratio: 40.9% (vs 43.4%)
CAR: 23.0% (Basel III compliant)

Key Risks & Emerging Concerns

Elevated provisioning continues due to asset stress in unsecured retail segments
Continued NIM pressure from RBI policy transmission delays
Return ratios compared unfavorably to peers (Axis, HDFC Bank)
Limited upside unless margins and asset quality stabilize

Long-Term Outlook & Investor Strategy

Despite short-term headwinds, Kotak Mahindra Bank remains fundamentally sound:

Strong liquidity, capital adequacy, and digital banking momentum
Diverse loan book and resilient growth even amid macro headwinds
Expected margin recovery in H2 FY26 as deposit repricing catches up

Investor Advice:

Long-term holders may consider holding through the cycle
Cautious buyers can await stabilization signals in Q2 or Q3 FY26
Avoid panic selling amid inflated downside pricing

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FAQs

Q1: Why did Kotak Mahindra Bank shares fall by nearly 7%?
Shares dropped due to weak Q1 PAT, high provisions, and compressed margins after disappointing results .

Q2: What are the broker target prices now?
Targets range from ₹1,950 (Emkay) to ₹2,550 (Jefferies), depending on brokerage stance .

Q3: How bad is the rise in NPAs?
GNPA rose to 1.48%, marginally up from 1.39%. The sharp provisioning reflects rising credit costs in unsecured lending segments.

Q4: Will margins recover in FY26?
Analysts expect margin recovery in H2 FY26, supported by deposit repricing and improved rate transmission .

Conclusion

Kotak Mahindra Bank’s Q1 FY26 results led to short-term volatility in its share price—bringing sharp downward movement and broker downgrades. Nonetheless, the bank’s solid fundamentals, healthy capital position, and long-term strategic resilience make it a strong pick for long-term investors. Margin and credit stabilization in upcoming quarters will be key triggers for stock recovery.