Kotak Mahindra Bank Shares Set for Re-Rating After RBI's Digital Nod
Kotak Mahindra Bank is in the spotlight after the Reserve Bank of India (RBI) lifted its restrictions on the lender, allowing it to issue new credit cards and onboard customers through online and mobile banking channels. This development has sparked optimism among investors, with analysts predicting a potential re-rating of the bank’s shares.
Market Reaction and Analyst Ratings
Following the RBI’s announcement, Kotak Mahindra Bank’s stock is expected to see increased interest. Global brokerage firm CLSA has maintained an ‘Outperform’ rating on the bank, setting a price target of ₹2,125, which implies a 9% upside from the previous closing price. According to CLSA, while the RBI’s decision is a positive sentiment booster, its direct impact on earnings per share (EPS) remains limited.
HSBC has taken a bullish stance, assigning a ‘Buy’ rating with a target of ₹2,210. The firm believes that Kotak’s customer acquisition strategy, especially through its ‘811’ digital banking platform, will help drive long-term growth.
Meanwhile, Morgan Stanley has placed an ‘Overweight’ rating on Kotak, with a price target of ₹2,290, citing the bank’s strong profitability and potential acceleration in unsecured loan growth.
Impact on Kotak Mahindra Bank’s Growth
Before the RBI restrictions, Kotak Mahindra Bank held a 4% market share in the credit card segment. However, due to the ban, its share declined by 50 basis points. Despite this, analysts believe the bank’s overall loan growth was impacted by less than 1 percentage point, making the long-term effect relatively minimal.
Macquarie, which has an ‘Outperform’ rating with a ₹2,200 price target, sees Kotak’s earnings growth outpacing its peers in FY26. The brokerage projects a 23% increase in core earnings, the highest among large private-sector banks.
Investor Sentiment and Future Prospects
Out of 44 analysts covering Kotak Mahindra Bank, 35 recommend a ‘Buy’, four suggest ‘Hold’, and five advise ‘Sell’. The stock closed 1.40% higher on Wednesday at ₹1,945.50 and has gained 12% over the past year.
Kotak shares have experienced modest fluctuations in recent years, with single-digit gains and losses. The stock had an 18.5% rise in 2020 but fell 10% in 2021, followed by minor gains in 2022 and 2023 before declining 6.4% last year.
Conclusion
With the RBI’s approval allowing Kotak Mahindra Bank to resume its digital onboarding and credit card services, the bank is poised for renewed growth. While analysts have mixed views on the stock’s immediate impact, the long-term outlook remains positive, making it a key player to watch in the banking sector.
Reference from:-https://www.cnbctv18.com/market/kotak-mahindra-bank-share-price-may-see-a-valuation-re-rating-analysts-after-rbi-nod-stock-price-targets-19557889.htm