Leading private sector banks like HDFC Bank had earlier reported an improved performance in the June 2025 quarter and investors were keenly awaiting the results of Kotak Mahindra Bank.
The Kotak Mahindra Bank stock ended Friday’s trade 0.8 % lower at Rs 2,125 and it is not too far from its 52-week high of Rs 2,301 that was reached on 22 April 2025.
Performance in the June 2025 quarter
For a key operational parameter net interest income (NIM), for Kotak Mahindra Bank it was 4.65% in the June 2025 quarter vis-à-vis 5% a year earlier. The central bank had cut repo rates in its last meeting in early June 2025, and while interest rates on bank loans / credit facilities have come down, interest rates on deposits with the bank come down with a lag.
Similarly, for larger rival, HDFC Bank, its NIM was 3.5% on interest earning assets in the June 2025 quarter vis-à-vis 3.7% a year earlier. And for Axis Bank, its NIM was 3.8 % in the June 2025 quarter vis-à-vis 4.05 % a year earlier. Axis Bank had tightened its bad loan recognition policy in the June 2025 quarter and it affected its various operational parameters.
Meanwhile, Kotak Mahindra Banks advances grew 14 % y-o-y to Rs 4.4 lakh crore in the June 2025 quarter and that was faster than larger rivals. HDFC Bank’s advances grew by nearly 6.7 % y-o-y to Rs 26.28 lakh crore in the first quarter of FY26. Axis Bank’s advances grew by 8 % y-o-y to Rs 10.59 lakh crore in the first quarter of FY 26.
The asset quality of Kotak Mahindra Bank has remained fairly good – its % of net NPAs to net advances was 0.34 % in the June 2025 quarter vis-à-vis 0.35 % a year earlier. Similarly for HDFC Bank, its % of net NPAs to net advances was 0.47 % in the June 2025 quarter vis-à-vis 0.39 % a year. And for Axis Bank, the tighter NPA norms resulted in its % of net NPAs of 0.45 % in the June 2025 quarter vis-à-vis 0.34 % a year earlier.
However, Kotak Mahindra Bank’s standalone net profit declined nearly 47 % y-o-y to Rs 3,281.68 crore in the June 2025 quarter, and that’s because there was an exceptional gain of Rs 3,519.9 crore in the June 2024 quarter on account of divestment of its 70 % stake in Kotak Mahindra General Insurance Company to Zurich Insurance Company.
On excluding the exceptional items, Kotak Mahindra Bank in its investor presentation has highlighted its standalone net profit in the June 2025 quarter fell nearly 7 % y-o-y.
Meanwhile, HDFC Bank’s standalone net profit rose 12.2 % y-o-y to Rs 18,155 crore in the quarter ended June 2025. In contrast, Axis Bank’s standalone net profit of Rs 5,806 crore in the June 2025 quarter fell nearly 4 % y-o-y. Axis Bank has highlighted stricter NPA recognition norms impacted its net profit by Rs 614 crore in the June 2025 quarter.
HDFC Bank and Kotak Mahindra have performed broadly similar on a key operational parameter – Kotak Mahindra Bank and HDFC Bank’s return on assets (average) not annualized was 0.48 % in the June 2025 quarter. On an annualized basis, it would be nearly 1.92 % for the full financial year compared to Axis Bank’s return on average assets (annualized) was 1.47 % in the June 2025 quarter.
Investors on Dalal Street
Investors have been bullish on private sector bank shares, given the several steps taken by the RBI to boost lending in the overall banking system.
The Kotak Mahindra Bank stock ended Friday’s trade 0.8 % lower at Rs 2,125 and it is not too far from its 52-week high of Rs 2,301.6 that was reached on 22 April 2025.
The HDFC Bank stock ended Friday’s trade lower by 0.5 % at Rs 2,004.5 and close to its 52-week high of Rs 2,035 that was reached on 24 July 2025.
Outlook going forward
The RBI has taken several steps to boost lending in the banking system. Investors will be closely monitoring Kotak Mahindra Bank, HDFC Bank and other leading banks for their ability to protect their NIMs.
And Kotak Mahindra Bank’s 2,154 branches across the country will play a key role in accessing low cost CASA deposits as well as growing its advances going forward.
Kotak Mahindra Bank trades at a P/E of more than 28 times estimated standalone FY 26 earnings
HDFC Bank trades at a P/E of more than 20 times estimated standalone FY 26 earnings, and Axis Bank trades at a PE of nearly 14 times standalone FY 26 earnings. Axis Bank no doubt trades at a lower valuation however, investor sentiment for the stock is weak given the recent quarterly performance.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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