On Thursday, Jefferies upgraded Kotak Mahindra Bank (NS:KTKM) Ltd. (KMB:IN) stock rating from Hold to Buy and increased the price target to INR 2,120 from INR 2,080. The upgrade reflects Jefferies' view that the bank's current valuations and market expectations are now more closely aligned with its realistic potential.
The bank's shares have not seen significant movement in the past 15 months, and analysts at Jefferies consider the current valuations, at 1.7 times FY26 adjusted price-to-book (PB) and 13 times FY26 adjusted price-to-earnings (PE), to be reasonable. They believe these valuations offer a fair discount compared to its peer, ICICI Bank.
Jefferies has made slight adjustments to Kotak Mahindra Bank's credit growth forecasts, which has resulted in a 2-4% reduction in earnings forecasts for the fiscal years 2026-2027. Despite this, the firm anticipates a compound annual growth rate (CAGR) of 15% in loans over the fiscal years 2025-2027.
The expectation of credit costs between 75 to 80 basis points over FY26-27 is also a key factor in the upgraded rating. Jefferies' analysis suggests that these factors, combined with the bank's current valuation, make Kotak Mahindra Bank a more attractive investment.
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