(Reuters) -Shares of India’s Kotak Mahindra Financial institution had been on observe for his or her worst day in additional than a yr on Monday, as a quarterly earnings miss sparked issues of worsening asset high quality.
The inventory fell 6.4% to 1,988.60 rupees, the bottom since mid-March and was the worst performer on India’s benchmark Nifty 50 index, which slipped 0.1%.
Kotak was additionally the highest laggard on the financial institution and personal financial institution indexes.
At the very least eight analysts slashed their value targets on the “purchase”-rated inventory after the personal lender missed quarterly revenue estimates on greater provisions for potential dangerous loans.
Asset high quality ache continued for Kotak and stress within the retail industrial autos section is anticipated to rise additional, analysts at Ambit mentioned.
“Contemplating such volatility, and restricted availability of buffer provisions, we anticipate fiscal 2026 credit score prices to stay elevated,” they mentioned.
Kotak, like a number of Indian banks, has been grappling with rising dangerous loans within the unsecured mortgage section. Its gross non-performing property ratio worsened to 1.48% of whole loans on the finish of June from 1.39% a yr earlier.
Its web curiosity margin, a key gauge of profitability, dropped to 4.65% from 5.02% a yr earlier, reflecting the impression of the Reserve Financial institution of India’s rate of interest cuts.
Analysts at Emkay International anticipate the margin to contract additional within the second quarter, with a gradual restoration anticipated from the third quarter.
When rates of interest are lowered, banks sometimes cross on the advantages to debtors early, adopted by decrease deposit charges, which might briefly squeeze margins.
Earlier this month, peer Axis Financial institution additionally reported disappointing outcomes, which fanned issues of declining asset high quality.
The session’s losses have trimmed Kotak’s year-to-date beneficial properties to 11%, versus a ten% climb within the personal banks index.
(Reporting by kashish tandon in Bengaluru; enhancing by Sumana Nandy and Mrigank Dhaniwala)