Kotak Mahindra Bank Limited: Comprehensive Stock Analysis Report | Scrolls
- Editor
- Aug 28
- 2 min read
by KarNivesh | 28 August, 2025
Overview
Kotak Mahindra Bank Limited (KMBL) is one of India’s leading private sector banks with strong fundamentals and a diversified business model. Established in 1985 by Uday Kotak, it became the first NBFC in India to convert into a bank in 2003. The merger with ING Vysya Bank in 2014 further expanded its reach. Today, Kotak operates 1,869 branches and 3,239 ATMs, with additional presence in GIFT City and Dubai.
Business Model & Segments
KMBL has four primary business segments:
Consumer Banking – retail loans, deposits, and NRI services; saw a 26% increase in consumer assets and 65% rise in unsecured loans.
Corporate Banking – services for large corporates and MNCs.
Commercial Banking – rural financing, tractor/commercial vehicle loans, and SME lending with 22% growth.
Treasury Operations – liquidity management and trading.
Beyond banking, it provides asset management, insurance, investment banking, and wealth management. This diversification reduces reliance on interest income and strengthens resilience.
Financial Performance
Between FY2021–FY2025, Kotak’s revenue grew at a CAGR of ~15% from ₹40,589 crore to ₹70,942 crore. Net profit increased from ₹9,990 crore to ₹22,126 crore (CAGR ~22%). ROE improved from 11.78% to 14.05% and ROA from 2.09% to 2.51%, reflecting efficient asset use.
Earnings per share rose from ₹50.53 in FY2021 to ₹111.29 in FY2025, with book value at ₹792.47. The bank maintains a healthy capital structure with a debt-to-equity ratio of 0.62. Market capitalization stands at around ₹3.91 lakh crore, making it India’s third-largest private bank.
At the current share price of ₹1,966, KMBL trades at a P/E of 20.4x and P/B of 2.48x. The dividend yield is modest at 0.13%, indicating a growth-focused reinvestment policy.
Recent Challenges
In Q1 FY2026, net profit fell 7% YoY to ₹3,282 crore, mainly due to higher provisions (₹1,208 crore vs ₹578 crore) and stress in unsecured lending (credit cards & microfinance). Despite this, deposits grew 13% YoY and advances 14%, indicating strong core growth.
Gross NPAs remained low at 1.48% in FY2025 (vs 1.40% in FY2024), and Net NPAs stood at 0.47%. The slight rise is concentrated in unsecured loans; management expects credit costs to normalize in upcoming quarters.
Growth Drivers & Risks
Kotak’s digital-first strategy, led by the Kotak 811 platform, enhances customer acquisition. Its rural expansion aligns with India’s financial inclusion goals. However, key risks include regulatory changes (RBI’s restrictions on unsecured lending), rising competition from fintechs, and macroeconomic headwinds impacting asset quality.
Kotak Mahindra Bank remains a fundamentally strong and well-managed institution. While near-term challenges in unsecured lending need monitoring, its diversified business, superior ROA, and digital innovation offer significant long-term growth potential.
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