Whalesbook
Motilal Oswal Financial Services has named Max Financials and Kotak Mahindra Bank as its preferred stock recommendations for the trading week beginning January 5, 2026. The brokerage firm cited robust financial performances and promising growth outlooks for both companies.
Max Financials: Strong Demand and Margin Expansion
Max Financials is positioned for a potential 25% upside, according to Motilal Oswal's analysis. The company reported a healthy second quarter of fiscal year 2026, with its Annual Premium Equivalent (APE) and Value of New Business (VNB) increasing by 16% and 25% year-on-year, respectively. This growth was accompanied by a significant margin expansion of 150 basis points year-on-year, reaching 25.5%.
The favorable product mix, with higher contributions from protection and non-par savings segments, underpinned this improvement. Max Financials' solvency ratio strengthened to 208%, and assets under management (AUM) grew by 9% year-on-year to INR 1.85 trillion. Management has maintained its fiscal year 2026 VNB margin guidance between 24% and 25%, supported by operational efficiencies and consistent growth across distribution channels.
Kotak Mahindra Bank: Steady Performance Amidst Market Conditions
Kotak Mahindra Bank is recommended with an expected 14% upside. The bank delivered an in-line performance for the second quarter of fiscal year 2026, meeting expectations for net interest income (NII), profit before provisions (PPoP), and profit after tax (PAT). PAT stood at approximately INR 32.5 billion, with NII growing 4.1% year-on-year to INR 73.1 billion.
Advances increased by 15.8% year-on-year to INR 4.63 trillion, driven by strong performance across its business banking, SME, home loans, and corporate segments. Deposits saw a 14.6% year-on-year rise, with healthy Current Account Savings Account (CASA) growth contributing to an improved CASA ratio of 42.3%. Lower treasury income was effectively offset by stringent cost control measures and reduced provisioning. Asset quality remained stable with declining slippages, and net interest margins (NIMs) are expected to improve. The bank anticipates its Return on Assets (RoA) and Return on Equity (RoE) to reach 2% and 12.7% respectively by fiscal year 2027.