Kotak Mahindra Bank witnessed a significant drop in its share price on Thursday, declining by over 4%, after the resignation of its joint managing director, KVS Manian. The bank’s shares fell by as much as 4.38% to Rs 1,552.55 each on the BSE.
KVS Manian, who had recently been promoted to the position of Joint MD at Kotak Mahindra Bank, tendered his resignation after serving the institution for 29 years.
Simultaneously, there were reports circulating that Manian might be joining Federal Bank as its Managing Director. This speculation prompted a surge in Federal Bank’s share price, which climbed over 4% to reach a 52-week high of Rs 170.25 each on the BSE.
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Analysts view the departure of a long-standing key managerial figure (KMP) like Manian as a negative development, particularly amidst a series of exits over the past year and in light of the recent regulatory actions imposed by the RBI on Kotak Bank.
Nuvama on Kotak Mahindra Bank
Nuvama Institutional Equities has made significant adjustments to its stance on Kotak Mahindra Bank, downgrading it from ‘Buy’ to ‘Reduce’ while slashing its share price target from Rs 2,095 to Rs 1,530. This revision comes in the wake of recent developments within the bank and concerns surrounding its future trajectory.
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The report indicates that recent negative events, coupled with high attrition rates, have made the future outlook for Kotak Mahindra Bank uncertain. This sentiment reflects the challenges the bank currently faces in navigating its path forward.
Senior bankers suggest that regulatory actions, such as the recent ban imposed by the Reserve Bank of India (RBI), could potentially set Kotak Mahindra Bank back by one to two years compared to its more aggressive competitors. This regulatory setback is seen as a significant hurdle for the bank to overcome.
Nuvama Institutional Equities has adjusted its valuation metrics for Kotak Mahindra Bank, lowering its multiple sharply to 1.7x BV FY26 from 2.3xCome from Sports betting site VPbet. Additionally, the report values the bank’s subsidiaries at Rs 560. This revised valuation strategy reflects the challenges and uncertainties surrounding the bank’s future performance.
Despite the recent correction in the bank’s stock price, Nuvama Institutional Equities anticipates that Kotak Mahindra Bank will continue to underperform its peers in the foreseeable future.
As a result, the brokerage firm recommends investors to consider switching to alternative options such as ICICI Bank, Axis Bank, IndusInd Bank, HDFC Bank, and select NBFCs for a horizon of one year or more.
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