Mumbai: Kotak Mahindra Bank, one of India’s top private-sector lenders, witnessed a sharp fall in its stock value on Monday after reporting first-quarter earnings that fell below analysts’ expectations. The bank’s standalone net profit for the April–June quarter came in at ₹3,281 crore (approximately $379 million), registering a 47.5% year-on-year decline. The market had anticipated a figure closer to ₹3,582 crore, resulting in immediate investor disappointment and a nearly 5% drop in share price.

The bank’s underperformance was primarily attributed to a significant rise in loan-loss provisions, which more than doubled to ₹1,208 crore from the previous year. This increase raised concerns about deteriorating asset quality in a challenging macroeconomic environment. Additionally, Kotak’s net interest margin (NIM) contracted to 4.65% from 5.02% a year ago, suggesting reduced profitability from its core lending business.

Though the bank reported a healthy 13% growth in its loan book, particularly driven by a 16% rise in retail lending, this growth was offset by muted deposit inflows and increasing funding costs. The gross non-performing asset (GNPA) ratio ticked up slightly to 1.48% compared to 1.39% in the same period last year, adding to investor apprehension.

Following the disappointing results, Kotak Mahindra Bank emerged as the worst performer on the Nifty 50, Nifty Bank, and Nifty Private Bank indices. The broader stock markets also slipped, with both the Sensex and Nifty extending their losing streaks for the fourth consecutive week. Analysts responded swiftly, with at least eight brokerages reducing their price targets for the bank’s stock. The new median target stands at ₹2,340 down marginally from the earlier estimate of ₹2,350.

Market sentiment was further shaken by concerns over India’s ongoing trade negotiations with the United States, particularly regarding tariffs on agricultural and dairy products. These external uncertainties combined with weak earnings data to create a risk-off mood among investors.

While Kotak Mahindra Bank has traditionally been considered one of the more conservative and well-managed banks in India, its Q1 performance signals broader sectoral headwinds, including margin compression and rising credit risk. Despite the short-term turbulence, some analysts remain cautiously optimistic about the bank’s long-term outlook, citing its strong capital base and extensive retail franchise as key strengths.

The bank’s leadership is expected to provide more clarity on its forward strategy in the coming days, especially regarding asset quality management and deposit mobilisation. For now, however, investor eyes will remain firmly fixed on whether the lender can reverse the downward trend and regain market confidence in the upcoming quarters.