Kotak Mahindra Bank shares in focus after reports of Sumitomo stake sale

On Wednesday, the Kotak Mahindra Bank shares surged nearly 1.5 percent touching a day’s high price of Rs 1,988.90 on NSE after multiple sources quoted, Sumitomo Mitsui Banking Corporation (SMBC), the Japanese financial giant, is executing its exit from Kotak Mahindra Bank by selling its entire 1.65 percent stake, valued at approximately Rs 6,116 crore through block deals as per Economic Times. This strategic move comes from SMBC’s intention to free up its investment in India, as it plans to significantly raise its shareholding in Yes Bank to nearly 25 percent, having recently secured regulatory clearances from the Reserve Bank of India (RBI) and other authorities.

Sumitomo Stake Sale Details

SMBC’s Kotak stake sale involves around 32.8 million shares offered at a floor price of Rs 1,880 each. Jefferies India and Nomura are acting as placement agents, with Kotak Securities also participating in execution as per sources. The block deal book opened on September 9, and settlement was expected by September 11. SMBC’s exit from Kotak, where it once held as much as 3.6 percent, marks a pivot of its India strategy, signaling a redeployment of capital to finance its larger infusion into Yes Bank, whose promoter status for SMBC was specifically waived by the RBI, exempting the group from certain regulatory obligations.

Q1FY26 Financial Performance

Kotak Mahindra Bank reported a robust yet challenging set of Q1FY26 results. On a consolidated basis, customer assets which includes advances and credit substitutes grew 13 percent year-on-year to Rs 5,57,369 crore, while assets under management rose 18 percent to Rs 7,50,143 crore. Standalone Net interest income (NII) came in at Rs 7,259 crore, up 6 percent year-on-year, as growing loan volumes partially offset some margin compression. The net interest margin (NIM) stood at a robust 4.65 percent.

However, profitability metrics saw a decline due to elevated provisioning: the bank posted a net profit of Rs 3,282 crore, down 7 percent year-on-year and 7.6 percent sequentially, mainly because provisions surged 109 percent to Rs 1,208 crore. Return on equity also moderated to 10.94 percent from 13.91 percent a year ago, while the gross NPA edged higher to 1.48 percent from 1.39 percent last year, and the CASA ratio slipped to 40.9 percent.

Regulatory Developments with RBI

Kotak Mahindra Bank has remained in the spotlight due to recent regulatory actions. Most notably, the RBI previously directed the bank to suspend onboarding new customers digitally, following concerns linked with online and mobile banking platforms. This restriction reflected RBI’s focus on digital security and compliance in the banking sector and created incremental scrutiny on Kotak’s digital initiatives.

Management Outlook and Guidance

Kotak’s management continues to signal confidence in the bank’s diversified lending approach and future profitability. Recent management commentary and broker notes indicate that asset quality headwinds, especially in microfinance and unsecured lending, may have peaked. The bank is expected to accelerate growth in retail-centric segments, such as personal loans, credit cards, and mid-market corporate lending, where margins and growth opportunities remain attractive.