A stock split is a corporate action in which a company increases the number of shares outstanding by dividing existing shares into smaller units. The primary goal is to make the shares more affordable and accessible to a wider range of investors, which can boost trading activity and market liquidity.The latest corporate action, if approved at the board meeting, will be the company’s first stock split in 15 years. According to Trendlyne, the lender last split its shares in 2010.
The company, which has a market capitalization of around Rs 4.14 lakh crore, reported second-quarter profit largely in line with estimates at Rs 3,253 crore, while operating profit before provisions was better than expected, according to Incred Equities. Net interest income, meanwhile, rose 4% over the year-ago period to around Rs 7,311 crore.
The Bank witnessed an improvement in asset quality and a decline in credit costs. “Stress in the unsecured portfolio has stabilized and is expected to gradually ease, thereby reducing credit costs,” Axis Securities said. Following recent quarterly results, analysts gave largely neutral commentary on the stock, which has put on quite a show this year. Shares are up about 16% this year. For example, Nomura maintained its ‘hold’ call with a price target of Rs 2,200 per share. The brokerage has raised its FY26-28F EPS estimates for the lender by 1-2%, driven by lower operating costs and lower credit costs.
During the second quarter, the Bank’s margins contracted by 11 basis points on a sequential basis, mainly due to the full impact of the 50 basis points cut in the repo rate implemented in June this year and a shift in the portfolio mix towards private assets.
Barring further rate cuts, Axis Securities says net interest margins appear to have bottomed out in the second quarter and are expected to resume their upward trajectory from the second half.
“As concerns over asset quality in the unsecured portfolio subside and early signs of growth emerge, Kotak Bank is expected to pursue expansion in the unsecured segments in a calibrated manner. The resumption of growth in the higher yielding segments, reductions in CRR and rate cuts on TDs, reflected in lower funding costs, should support margin recovery from the second half of the year,” the broker said.
Nuvama has a target of Rs 2,082 on the stock as the broker pointed out that both margin and slippage performance in the second quarter was weaker than peers for two consecutive quarters.
On Friday, before the announcement of the board meeting, shares of Kotak Mahindra Bank closed 0.5% higher at Rs 2,075.15 on NSE.
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