Kotak slumps into red

Kotak Mahindra Bank is among the top three losers on the BSE, going down to an intraday low of Rs.1977.20, down 7%. Its 52-week low is at Rs.1679.10.

The stock price has reacted to its NIM for Q1FY26, which showed a much sharper fall than expected.

The Net Interest Margin (NIM) fell sharply from 5.3% to 4.5% (YoY) in Q1 FY26 due to

higher cost of deposits, shift away from low-cost CASA deposits and a shift in loan mix wherein the share of secured/low-risk borrowers (e.g., mortgages, LAP, SME), which carry lower yields went up.

This apart, the management has highlighted that NIMs will bottom in the September quarter and will stabilise in the second half.

The management expects margins to stabilise in the range of 4.4–4.6%, expects cost-to-income ratio to decline slightly but said that loan growth will pick up as tech and branch productivity improves.

Today might well be a knee jerk reaction. Though the short-term NIM compression is a concern, management’s outlook suggests the worst is over by Q2. H2 will most likely see margin recovery.