Kotak Mahindra Bank Q2 Preview: Profit Seen Rising 27–31.9%

Kotak Mahindra Bank could report a 27–31.9% year-on-year increase in profit after tax for the September quarter of FY27, according to brokerage forecasts reported by Economic Times Markets on October 23. The earnings preview points to stronger lending and operating profitability, but differing expectations for funding costs and net interest margins.

These are estimates ahead of the results, not reported financial outcomes. Motilal Oswal Financial Services (MOFSL) forecasts profit of ₹4,290 crore, up 31.9% from a year earlier. ICICI Securities projects ₹4,284.6 crore, a 31.7% increase, while Dolat Capital expects ₹4,120 crore, up 27%.

The sequential picture is more restrained: MOFSL and ICICI Securities expect profit growth of about 4.1% and 3.9%, respectively, from the June quarter. Dolat Capital forecasts no quarter-on-quarter increase.

Interest income grows, but margin forecasts diverge

The three brokerages forecast net interest income—the difference between interest earned and interest paid—to increase 11.8–15% year-on-year. Dolat Capital has the highest estimate at ₹8,370 crore, followed by MOFSL at ₹8,330 crore and ICICI Securities at ₹8,171.8 crore. Their sequential growth forecasts range from 3.1% to 6%.

Higher income does not necessarily mean a stronger interest margin. MOFSL expects the net interest margin to fall 10 basis points from the previous quarter to 4.43%, citing the effect of foreign currency non-resident bank, or FCNR(B), deposit inflows on the funding mix.

ICICI Securities instead forecasts a steady margin of 4.53%, unchanged from Q1FY27 and marginally below the 4.54% level a year earlier. Deposit pricing, funding costs and lending yields will therefore be important to understanding how much of the bank’s balance-sheet expansion translates into profitability.

Loan and deposit expansion underpin expectations

MOFSL projects advances to rise 7.9% quarter-on-quarter and deposits to increase 8.4%, attributing the expected expansion to strong FCNR(B) flows and broader business growth.

ICICI Securities estimates advances of ₹5,55,225.1 crore, up 20% year-on-year and 8.4% from ₹5,12,249 crore in the June quarter. Management’s assessment of deposit mobilisation and the durability of foreign-currency inflows will help investors judge whether this pace of lending can be maintained without further pressure on margins.

Cost control could lift operating profit

Pre-provision operating profit, which measures operating earnings before provisions, is forecast to grow faster than net interest income. MOFSL estimates ₹6,360 crore, up 20.7% year-on-year; ICICI Securities expects ₹6,338.1 crore, up 20.3%; and Dolat Capital projects ₹6,210 crore, up 18%.

MOFSL expects restrained operating-expense growth to keep the cost-to-income ratio near 46%. That forecast makes expense discipline an important part of the earnings outlook, particularly if funding costs compress margins.

Asset quality remains a test of earnings durability

MOFSL expects credit costs to ease slightly from the June quarter as first-quarter seasonal effects fade. ICICI Securities forecasts fresh slippages of ₹1,350 crore, an increase of 2.2% sequentially but a decline of 17.1% from a year earlier.

The distinction matters: lower year-on-year slippages would not rule out a quarterly increase in new problem loans. Provisioning requirements, non-performing asset trends and management’s outlook on credit costs remain relevant alongside the headline profit forecast.

MOFSL retains Buy call

MOFSL has retained a Buy rating with a ₹470 target price against the ₹419 market price cited in the preview, implying roughly 12% upside. The cited price is not a live market quote.

The brokerage raised its FY27 earnings-per-share estimate by 1.9% but lowered its FY28 estimate by 1.6%. The rating and target are MOFSL’s investment view, not a recommendation from BharatVox.