Kotak Mahindra Bank Upgraded to BUY; Strong Retail Focus and Digital Push to Drive 20% Earnings CAGR, TP at ₹2,400

Kotak Mahindra Bank (KMB) is aligning its loan growth with a disciplined target of 1.5–2.0x while strengthening granularity by focusing on retail and SME segments. SA repricing and the ActivMoney sweep are expected to ease funding costs and limit margin pressure after the sharp 1QFY26 decline. Key highlights: Growth Outlook: NII estimated to grow at 19% CAGR over FY26–28, with NIMs stabilizing and improving from 3QFY26. Asset Quality: Provisioning costs expected to normalize, with full-year credit costs at ~70bp vs 93bp in 1Q. Operational Efficiency: Adding 150–200 branches annually without increasing headcount; strong digital and retail push to diversify fee income. Profitability: RoA/RoE projected at 2%/12.8% by FY27E, sustaining robust return ratios. After nearly five years of a Neutral stance, the brokerage upgraded KMB to BUY in Jan 2025 at ₹1,759. With valuations remaining reasonable and earnings CAGR of 20% expected over FY26–28, the stock is well-positioned for performance. Target price retained at ₹2,400 (2.4x FY27E). Hashtags: #KotakMahindraBank #KMB #BankingStocks #EquityResearch #RetailBanking #DigitalBanking #StockMarketIndia