The adjusted net profit in Q3FY25 is likely to grow at 9-11.3%, the estimates said, pegging the bottom line in the range of Rs 3,268 crore to Rs 3,345 crore.
The estimates have been given by Nomura, Citi, Emkay Research and Elara Capital.
Nomura remains the most conservative in NII estimates while Emkay is the most bullish. On the profit after tax (PAT) front, Citi has the lowest estimate while Emkay has the highest.
The lender is expected to report a decline in its net interest margin (NIM) on a quarter-on-quarter basis on account of a weaker CASA.
Provisions are expected to go up in double digits both on YoY and sequential basis due to rise in delinquencies in the unsecured retail and MFI.Kotak Bank will announce its Q3 earnings on Saturday, January 18.
Here’s what brokerages recommend:
Nomura
Nomura expects Kotak Mahindra Bank’s Q3FY25 net interest income (NII) to grow by 9% on a YoY basis while 2% on a sequential basis to Rs 7,140 crore. The adjusted profit after tax (PAT) in the reporting quarter could be around Rs 3,340 crore, likely witnessing an 11% YoY jump while remaining flat on a QoQ basis.
Core Pre-Provision Operating Profit (PPoP) may go up by 2.8% YoY and 2% QoQ at Rs 5,120 crore.
The net interest margins (NIMs) could fall on a YoY and sequential basis by 37 bps and 6 bps, respectively, to 4.9%. The QoQ decline would be on account of weaker CASA.
Due to a rise in delinquencies in the unsecured retail and MFI, the credit cost is likely to go up by 6 bps over Q3FY24 and 4 bps over Q2FY25 at 0.8%.
Nomura has a buy view on Kotak Bank for a price target of Rs 2,170.
Citi
Citi expects Kotak Bank to report a 9% YoY and 2% QoQ growth in its October-December NII at Rs 7,133 crore. NIMs may contract by 35 bps on a YoY basis while 7 bps on QoQ basis at 4.94%.
The net profit is seen to rise by 9% YoY while declining by 2% on a QoQ basis at Rs 3,268 crore.
Lender’s operating profit is pegged around Rs 5,097 crore, which may go up by 12% YoY while remaining flat over Q2FY25.
A loan uptick of 15% YoY and 3% QoQ is expected in the reporting quarter at Rs 4,11,902 crore. Deposits as of December 31, 2024, could rise by 16% YoY and 2% QoQ at Rs 4,72,175 crore.
The provisions are expected to rise in double digits both on a YoY and sequential basis at Rs 739 crore. It could go up by 28% over Q3FY24 and 12% over Q2FY25.
“Though regulatory restrictions will continue to have its impact on unsecured lending, we estimate that corporate/mortgages/business banking will sustain advances momentum (15% YoY/3% QoQ growth). With the revamped focus on ActivMoney deposits and wider outreach, we estimate broadly similar deposits growth as well,” Citi said in a note.
“Credit card and MFI stress will likely remain elevated in 3Q as well while PL may see some QoQ moderation. Credit cost is estimated to be similar to 2Q with some upward bias,” the brokerage note said.
Update on progress of RBI supervisory action will be key to watch out for.
Emkay Research
The net interest income earned by the private lender is expected to stand at Rs 7,251 crore, witnessing a likely uptick of 11% over Q3FY24 and 3.3% over Q2FY25.
PAT in the reporting quarter is pegged around Rs 3,345 crore, which could rise by 11.3% YoY and 0.1% QoQ.
The PPoP is seen around Rs 5,111, rising by 12% YoY and 0.2% QoQ.
Elara Capital
Elara expects NII to grow by 9.5% YoY and 2.2% QoQ to Rs 7,175 crore. The company’s PAT may grow by 11% YoY at Rs 3,329 crore while witnessing a minor decline of 0.5 on a sequential basis.
NIMs may be reported at 4.4%, falling by 5 bps YoY and QoQ.
Loans at the end of the Q3 are pegged at Rs 4,15,100 crore, a likely increase of 15.4% YoY and 3.9% QoQ. Deposits, on the other hand, could jump 17% YoY and 4% QoQ to Rs 4,79,900 crore.
Provisions would go up by 29.3% YoY and 13.4% QoQ to Rs 749 crore, this brokerage said.
“Expect positive surprises on loan growth. However, expect another quarter of NIM decline (likely to be higher than peers). The bank may end up seeing a volatile quarter on asset quality with variance at play in MFI and unsecured portfolio,” Elara said.
Elara will watch for related commentary on asset quality and the bank’s unsecured portfolio.
Among other monitorables are management commentary on tech spends and correspondence with the RBI along with sustained growth.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
