Kotak Mahindra Bank shares fall 5% after multiple downgrades by analysts on Q4 results

Multiple analysts tracking private lender Kotak Mahindra Bank Ltd. have downgraded the stock after its March quarter results. The lender had reported results on Saturday. In response, the stock has declined over 5% and is the biggest drag on the Nifty 50 and the Nifty Bank index on Monday, May 5.

Kotak Mahindra Bank reported a 5.4% growth in its net interest income, compared to the same quarter last year, while its net profit fell by 14% over the same period. Its asset quality remained stable, but provisions went up both on a sequential as well as on a year-on-year basis.

Brokerage firm CLSA has downgraded the stock to "hold" from its earlier rating of "underperform", but has raised its price target on the stock marginally to ₹2,225 from ₹2,125 earlier.

It has cut its profit estimates for Kotak Mahindra Bank by 3% to 5% due to assumptions of a lower Net Interest Income and higher Operating Expenditure (Opex).

Nomura too has downgraded the stock to "neutral" from its earlier rating of "buy", but has revised its price target marginally higher to ₹2,200 from ₹2,110 earlier.

Kotak Mahindra Bank shares have also been downgraded by Nuvama, who cut its rating to "hold" from its earlier recommendation of "buy". Nuvama has also revised Kotak Bank's price target higher to ₹2,350 from ₹2,040 earlier.

Bernstein has a "market-perform" rating on Kotak Mahindra Bank with a price target of ₹1,950.

The brokerage wrote in its note that Kotak Bank's deposit growth was slower than both ICICI Bank and HDFC Bank, adding that its results highlight that the lender is facing a margin versus growth trade-off in the near-term.

Among the 44 analysts that have coverage on Kotak Mahindra Bank, 29 of them have a "buy" rating on the stock, 10 say "hold", while five of them have a "sell" rating.

Shares of Kotak Mahindra Bank are trading 5% lower on Monday at ₹2,077.3.