Kotak Mahindra Bank: Lifting of RBI curbs will help Kotak Bank to accelerate loan growth; boost performance: Rahul Malani

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The Reserve Bank of India (RBI) on Wednesday announced the lifting of supervisory restrictions previously imposed on Kotak Mahindra Bank, and allowed the bank to resume onboarding of new customers through its online channels and issue new credit cards. Rahul Malani of Mirae Asset Sharekhan explains what it will mean for the stock.

How do you see the Kotak Mahindra Bank stock moving because in this market fall, it is outperforming. The numbers were solid and now the news flow has turned the corner?
Rahul Malani: Our house has a constructive view on Kotak because after lifting of the ban, we will see continuous margin improvement as well as a gradual improvement in the market share in loan growth as well as the deposit market share which they have lost in the last two to three quarters.

Despite the loss of market share, they have withstood the sectoral headwinds. Last quarter also, the numbers were quite healthy. But lifting of the ban will help to gradually accelerate the loan growth in the unsecured loan segment as and when the environment is conducive in going forward with it, at least in the H1 of FY26.

Secondly, operating performance was impacted by the lower fee income, which they were not able to earn on the credit cards. So lifting of the ban will boost the operating performance for the Kotak Bank. Going into the lower interest rate cycle, a credit card is a high-yielding product, and will partially support the margins also, where the sector will be seeing a margin pressure whereas Kotak Bank will be able to manage somewhat because they want to take this unsecured share to around 15% from 10% share currently. All in all, it’s a positive outcome for Kotak Bank.

The valuation also must be quite attractive because the stock itself is trading at a steep discount to its peers.
Rahul Malani: The main re-rating will happen because the outlook is improving and valuations are very reasonable. There has been continuous underperformance for the last five to six years. Given the sectoral headwinds in the sector, people will bet on better outlook and better franchise.

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https://economictimes.indiatimes.com/markets/expert-view/lifting-of-rbi-curbs-will-help-kotak-bank-to-accelerate-loan-growth-boost-performance-rahul-malani/articleshow/118202517.cms

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