Uday Kotak loses over a billion dollars in net worth as Axis Bank takes Kotak Mahindra Bank’s spot

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Axis Bank Ltd. has overtaken Kotak Mahindra Bank Ltd. on Thursday to become the fourth largest lender by market capitalisation in India. This happened after Kotak Mahindra Bank’s shares declined 10% following the Reserve Bank of India’s directives barring the lender to onboard new customers through digital channels and from issuing new credit cards.

The net worth of Uday Kotak, the former managing director who still owns 26% stake in the bank, has fallen by $1.3 billion following the sharp sell-off in the stock.

As of Thursday, Axis Bank has a market capitalisation of ₹3.43 lakh crore, while Kotak Mahindra Bank, after a ₹30,000 crore market capitalisation erosion, commands a market capitalisation of ₹3.32 lakh crore.

HDFC Bank tops the list with a market capitalisation of ₹11.5 lakh crore, followed by ICICI Bank at ₹7.7 lakh crore. India’s largest lender, State Bank of India follows suit, with a market capitalisation of 7 lakh crore.

This is the first instance since September 2015 when Axis Bank has toppled Kotak Mahindra Bank in market capitalisation terms. Back then, both lenders had a market capitalisation of ₹1.5 lakh crore each.

Interestingly, Axis Bank was less than half the size of Kotak Mahindra Bank in market capitalisation terms in November 2021. Since then, Axis Bank has added close to ₹1.4 lakh crore in market capitalisation, while Kotak Mahindra Bank has lost ₹46,000 crore in market capitalisation.

Analysts who have coverage on Kotak Mahindra Bank said that while the impact on the lender’s profitability is likely to be minimal, it may have a greater impact in case the ban remains in place for a prolonged period. They also warned of a loss in reputation for the bank post the RBI action.

Kotak Mahindra Bank, the most expensive banking stock in India has delivered negative returns so far in 2024, declining 13%. In comparison, the Nifty Bank is unchanged for the year.

At current prices, Kotak Mahindra Bank has a one-year price-to-book multiple of 3.3x, while HDFC Bank trades at a multiple of 2.3x. ICICI Bank and SBI are trading at a multiple of 2.8x and 1.7x price-to-book respectively. Axis Bank trades at a price-to-book multiple of 1.9x on a one-year forward basis.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow