Tag: Kotak Mahindra Bank

Kotak Mahindra Bank shares jump 6% after multiple analyst upgrades post Q4

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

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Shares of Kotak Mahindra Bank Ltd. were trading with gains of up to 6% on Monday. The trigger for Kotak was its all-round better-that-expected results for the March quarter (Q4), which were announced over the weekend.

Analysts at most brokerage firms remained bullish on the Kotak Mahindra Bank stock despite negativity around recent senior management exits and an upset Reserve Bank of India (RBI).

Since the central bank’s action, Kotak shares have fallen nearly 14%. At 11 am today, the scrip was trading 5.41% higher at ₹1,630.40 apiece on the NSE. It also hit a day’s high of ₹1,633 and a day’s low of ₹1,594.

Global brokerage firm Nomura has upgraded the stock to ‘Buy’ from ‘Neutral’ and gave a target price of ₹2,000 per share, saying that a high quality stock is now at a bargain.

Although Nomura highlighted the elevated slippages during the March quarter, the brokerage said that asset quality for the private sector lender remains well in control.

Nomura said that resolution of the RBI’s restrictions and any further churn in the top management will be the key to watch, the current valuations for Kotak remain attractive.

JPMorgan has upgraded Kotak to ‘Overweight’ from its earlier rating of ‘Neutral’, citing supportive valuations. The brokerage has a price target of ₹2,070 on the stock.

JPMorgan said that the operating metrics in the March quarter for Kotak were strong with notable fee income growth.

The foreign brokerage said that Kotak Mahindra Bank can continue to grow the balance sheet at a compounded annual growth rate (CAGR) of 16% over the next two years.

According to Kotak’s management, the RBI order to stop onboarding new online and credit card customers is expected to hit profit before tax by ₹300-450 crore per annum. However, brokerage firm Emkay Global believes that the impact on its business and financials could be far higher, as seen in HDFC Bank.

“Management remains hopeful of resolving the RBI’s concerns that ultimately led to the current embargo, but we believe that fulfilling the RBI’s requirement—for external audit followed by corrective measures to the Regulator’s satisfaction—for lifting the ban, is a task easier said than done,” it said.

Higher attrition, including in key managerial personnel, and the bank’s strategy to reduce provision buffers as against its peers, adds to Emkay’s concerns. The brokerage has retained a ‘Reduce’ rating on the stock with a lower target price of ₹1,625 per share from ₹1,750 earlier.

With one-offs and the digital ban, Nuvama has maintained a ‘Reduce’ rating on the stock with a target price of ₹1,530 per share. While the CEO pointed to a low, net-PBT impact of ₹450 crore from the digital ban, it is unclear how the ban impacts customer acquisition, yields, asset growth and what sacrifices shall be made to BAU opex to maintain tech spend at 10% of opex.

Given the bank’s near-term challenges on growth, higher opex largely towards tech and normalising credit costs with bank pursuing growth in unsecured book, Axis Securities have ‘Reduced’ its earnings estimates by 4-7% over FY24-26. It expects Kotak’s return on asset and return on equity to be limited to 2.2% and 13-14%, respectively, over FY25 to FY26.

The brokerage has a ‘Buy’ recommendation on the counter with a target price of ₹1,755 per share.

Out of the 43 analysts who have coverage on the Kotak stock, 24 have maintained a ‘Buy’ recommendation, while 12 of them have a ‘Hold’ rating. Seven analysts have a ‘Sell’ recommendation on the lender.

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

Kotak Mahindra Bank Q4: Upgrades from CLSA, Nomura, JPMorgan citing supportive valuations

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

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Multiple analysts who have coverage on Kotak Mahindra Bank have upgraded the Mumbai-based private lender, after it reported its March quarter results on Saturday. Analysts from CLSA, Nomura and JPMorgan have upgraded the stock, while Jefferies has cited risks from the RBI restrictions and potential attrition as the rationale behind cutting its price target on the stock.

Yet, 24 out of the 43 analysts who have coverage on the stock maintained their “buy” recommendation, while 12 of them have a “hold” rating. Seven analysts have a “sell” call on the lender.

Kotak Mahindra Bank reported the strongest deposit growth in 22 quarters for the January-March period, while the lender’s Net Interest Margin saw the highest expansion among other major private lenders.

Brokerage firm JPMorgan has upgraded Kotak Mahindra Bank to “overweight” from its earlier rating of “Neutral” citing supportive valuations post the recent RBI action and senior management departure. The brokerage has a price target of ₹2,070 on the stock.

JPMorgan said that the operating metrics in the March quarter for Kotak were strong with notable fee income growth.

The brokerage said that Kotak Mahindra Bank can continue to grow the balance sheet at a Compounded Annual Growth Rate (CAGR) of 16% over the next two years.

Analysts at Nomura have also upgraded the lender to “buy” from its earlier rating of “neutral.” It has a a price target of ₹2,000 on the stock. Although Nomura highlighted the elevated slippages during the quarter, it said that asset quality for the lender remains well in control.

The brokerage said that resolution of the Reserve Bank of India’s restrictions and any further churn in the top management will be the key to watch, the current valuations for the bank remain attractive.

CLSA has also upgraded Kotak Mahindra Bank to a “buy” from its earlier rating of “Accumulate” but has cut its price target to ₹1,920 from ₹2,100 earlier. CLSA has upgraded the stock despite what it called “near-term uncertainties.”

However, it does mention that a meaningful re-rating for the bank will happen only post the lifting of the RBI ban.

On the flip side, Jefferies has maintained its “hold” rating on Kotak Mahindra Bank but cut its price target to ₹1,790 from ₹1,970 earlier. The brokerage said that deposit growth was healthy but it expects loan growth to be slower as a rise in unsecured loans nomalise.

Resolution of the RBI restrictions and controlled management attrition is the key for the lender, according to Jefferies.

Shares of Kotak Mahindra Bank fell 4% last week after a 10% drop in the week before post the RBI restrictions.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

Manian doesn’t have anything in his hands, says Kotak Mahindra Bank CEO & MD Ashok Vaswani

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

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KVS Manian does not have anything in his hands, said Kotak Mahindra Bank’s Managing Director and Chief Executive Officer Ashok Vaswani Saturday, during a post-results press conference.

“Manian does not have anything in his hands right now, to the best of my knowledge… Obviously, you’ll have to ask Manian that question,” Vaswani said in response to a query regarding the recent exit of the lender’s former Joint Managing Director KVS Manian.

“Manian had aspirations… and wanted to pursue other opportunities in the financial sector which obviously made it a little more difficult from the timing perspective,” Vaswani added.

In the resignation letter, Manian had said, “I hereby tender my resignation from the services of Kotak Mahindra Bank for pursuing other opportunities in financial services that I am exploring. Consequently, I would also step down from the board of the bank.”

Manian tendered his resignation after nearly 30 years with the private lender.

Following this development, the company has tweaked its leadership structure, according to a press release. Vaswani, MD and CEO of the bank, will oversee the bank’s wholesale, commercial and private bank divisions while the asset reconstruction division, investment banking and institutional equities businesses will report to  Deputy MD, Shanti Ekambaram.

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

Kotak Mahindra Bank Q4 profit beats estimates, rises 18% YoY to ₹4,133 crore; NII up 13%

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

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Leading private sector lender Kotak Mahindra Bank on Saturday (May 4) reported a 18.2% year-on-year (YoY) rise in its March quarter standalone net profit at ₹4,133.3 crore, compared to ₹3,495.6 crore in the same quarter a year ago. The profit figure was higher than CNBC-TV18’s poll of ₹3,376.9 crore.

The lender’s net interest income (NII) jumped 13.2% YoY to ₹6,909.4 crore during the quarter, higher by 3.6% than our poll of ₹6,670.2 crore. Kotak’s NII stood at ₹6,102.5 crore during the corresponding quarter of last year.

Kotak’s net interest margin (NIM) increased to 5.28%, compared to 5.22% on a sequential basis.

The bank’s gross non-performing assets (GNPA) declined to 1.39% in the March quarter as against 1.73% in the previous December quarter while net non-performing assets (NNPA) stood unchanged at 0.34%.

The lender’s advances jumped 20% YoY to ₹391,729 crore as of the fourth quarter while customer assets, which comprises advances and credit substitutes, rose 20% YoY to ₹423,324 crore.

The board of Kotak Mahindra Bank also recommended a dividend of ₹2 per equity share of the face value of ₹5 each for the financial year 2024.

The dividend will be subject to the approval of the members at the ensuing Annual General Meeting of the bank.

Recently, the Reserve Bank of India (RBI) had directed the lender to stop onboarding new customers through online and mobile banking channels and issuing fresh credit cards.

The bank, in a presentation today, said that it is looking to redeploy resources to minimise business impact of the RBI action. Kotak also said that it believes that the directions will not materially impact its overall business and it will step-up investments to fortify its IT systems.

On Friday, shares of Kotak Mahindra Bank settled 1.61% lower at ₹1,550.30 apiece on the NSE. The stock has declined nearly 20% in 2024 so far.

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

Kotak Mahindra Bank Q4 Preview: Net interest margin may be under pressure, asset quality might improve

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

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Kotak Mahindra Bank, one of India’s leading private sector lenders, is set to release its earnings for the quarter ended March 2024 on Saturday, May 4. According to a CNBC-TV18 poll, the private sector lender is likely to report standalone net interest income of ₹6,670.2 crore for the fourth quarter of FY24, a 9.3% year-over-year increase from ₹6,102.6 crore.

The projected net profit is expected to be ₹3,376.9 crore, a 3.4% decline from the previous year’s ₹3,495.6 crore.

Investors will be keeping a close eye on the growth of deposits, which is expected to grow 17.5% on-year and 4.5% QOQ.

Kotak’s loan growth is seen at 17.2% year-on-year and 4.3% quarter-over-quarter. However, the net interest margin may both year-on-year and sequentially.

It will be crucial for investors to watch the momentum of low-cost deposits, as it has the potential to significantly impact the bank’s earnings.

On a positive note, Kotak Mahindra Bank’s asset quality is expected to improve quarter-over-quarter. The bank’s slippages are expected to be at Q3 levels.

The bank’s management commentary and outlook for the future will also be of significant interest to investors.

On Friday, shares of Kotak Mahindra Bank settled 1.61% lower at ₹1,550.30 apiece on the NSE.

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

Federal Bank surges to 52-week high ahead of Q4 results, speculations rife over new leadership

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

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Federal Bank shares hit a 52-week high on Thursday (May 2). The stock rose by nearly 5% to reach ₹170.25 apiece. This surge comes just ahead of the bank’s board meeting where it is expected to report its financial results for the March quarter and unveil future plans and initiatives.

One of the driving factors behind this surge is speculation surrounding the bank’s leadership.

Kotak Mahindra Bank’s KVS Manian, who was recently elevated as Joint Managing Director, resigned on Tuesday (April 30), sparking rumors that he may be moving to Federal Bank.

CNBC-TV18 had earlier reported, citing sources, that Manian is among the short-listed candidates for the position of the new Managing Director & CEO.

However, despite widespread speculation, there has been no official announcement regarding Manian’s potential appointment or any other leadership changes within Federal Bank.

Shyam Srinivasan, who has been serving as the CEO of Federal Bank, is scheduled to complete his term in September 2024.

In March, Federal Bank stopped issuing new co-branded credit cards, citing regulatory guidance from the Reserve Bank of India (RBI).

The move came as part of the bank’s commitment to rectify areas of deficiency outlined in a letter from the RBI and to ensure compliance with regulatory standards.

The Federal Bank, in its notice, assured customers that it is actively working to address the identified issues and will seek regulatory clearance before resuming the issuance of new co-branded credit cards.

At the time of writing this report, Federal Bank shares were trading over 4% higher at ₹169.10 apiece on BSE.

ALSO READ | Kotak Mahindra Bank shares fall after KVS Manian resigns, Nuvama downgrade

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

Kotak Mahindra Bank shares fall after KVS Manian resigns, Nuvama downgrade

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

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Shares of Kotak Mahindra Bank Ltd. have opened 2.1% lower after the lender saw a top-level exit on Tuesday, just a week after the RBI restrictions on onboarding new digital customers and issuing fresh credit cards.

KVS Manian, recently elevated as Joint Managing Director, resigned with immediate effect on Tuesday. CNBC-TV18 had earlier reported citing sources that he is moving to Federal Bank and is one of the short-listed candidates as the new MD & CEO after incumbent Shyam Srinivasan’s term ends in September this year.

However, there is no official confirmation of the same. Federal Bank will be reporting its March quarter results today and also share future plans and new initiatives.

Brokerage firm Jefferies retained its “hold” rating on the stock with a price target of ₹1,970 per share. It said that it will watch for more senior and mid-management exits from the lender and if that happens, it can add to the drag from RBI restrictions.

Jefferies also said that senior level exits can affect the bank’s growth and valuations.

Nuvama has downgraded the stock to “reduce” citing back-to-back negative developments, from its earlier rating of “buy” and also cut its price target to ₹1,530 from ₹2,095 earlier.

The brokerage said that many senior exits have bunched up over six months and the recent changes shall hurt the lender’s growth and profit over the next 12-18 months.

Right after the stock began trading, 0.5% equity or 1.07 crore shares worth ₹1,677 crore changed hands in a block deal. Buyers and sellers in that transaction are not known yet.

Shares of Kotak Mahindra Bank fell 4% at the start of trade to ₹1,558.70. The stock is down 17% on a year-to-date basis.

Also Read: Kotak Mahindra Bank to see de-rating post RBI action? Here’s what analysts said

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

Kotak Mahindra Bank’s joint managing director KVS Manian resigns

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

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Private sector lender Kotak Mahindra Bank on Tuesday (April 30) said KVS Manian has resigned as Joint Managing Director of the bank effective immediately.

“…please note that Krishnan Venkat Subramanian (KVS Manian), ceases to be the Whole-time Director designated Joint Managing Director, with immediate effect on account of his resignation considered, noted and accepted at the above referred Board Meeting,” the lender said in a regulatory filing.

“Consequently, KVS Manian ceases to be a Director and a Key Managerial Personnel of the Bank,” the bank said.

In February this year, CNBC-TV18 reported that Federal Bank shortlisted Kotak Mahindra Bank’s KVS Manian as a Chief Executive Officer (CEO) candidate.

According to sources, the bank has listed two internal candidates for the Managing Director (MD) and CEO roles. The bank is expected to submit three names to the Reserve Bank of India (RBI) for approval. The process is part of the succession planning at the Kochi-headquartered bank.

Shares of Kotak Mahindra Bank Ltd ended at ₹1,623.75, down by ₹16.50, or 1.01% on the BSE.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

RBI’s action against Kotak Mahindra Bank: Here’s your FAQ answered

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

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The Reserve Bank of India (RBI) has recently taken measures against Kotak Mahindra Bank due to repeated non-compliance with IT norms. As a result, the bank has been prohibited from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards.

Here are some frequently asked questions to address concerns users may have:

[faq][ques]Will the current action affect existing customers and their use of Kotak Mahindra Bank’s digital services?[/ques][ans]There is no problem with the bank’s digital services if users have any existing savings account, salary account, loan account, or credit card. The bank has assured uninterrupted services, including credit card, mobile, and net banking, for existing customers.[/ans][/faq]

[faq][ques]If a user had applied for a Kotak Mahindra Bank credit card online. What will happen to the application now?[/ques][ans]If the bank processed and approved the card application before the RBI’s embargo, the user will still receive the card. However, no new credit card applications are being accepted at the moment.[/ans][/faq]

[faq][ques]If a user had applied for a personal loan online before the RBI’s supervisory action. What will happen to the sanction of that loan now?[/ques][ans] If the personal loan hasn’t been sanctioned yet, it might not be processed further due to the current restrictions.[/ans][/faq]

[faq][ques]Can users get a new credit card from Kotak Mahindra Bank?[/ques][ans]As RBI has banned Kotak Mahindra Bank from issuing new credit cards, users cannot obtain a new credit card from the bank at the moment.[/ans][/faq]

[faq][ques]Can Kotak Mahindra Bank customers apply for a new personal loan online?[/ques][ans]No, users cannot apply for a personal loan online despite having an account with the bank.[/ans][/faq]

[faq][ques]Can users open a savings bank account at any branch of Kotak Mahindra Bank?[/ques][ans] Yes, users can open a savings account at any branch of Kotak Mahindra Bank, as the bank is not restricted from onboarding new customers offline.[/ans][/faq]

[faq][ques]How long will RBI’s restrictions on Kotak Mahindra Bank remain in place?[/ques][ans]The restrictions will be reviewed upon completion of a comprehensive external audit and remediation of deficiencies, which experts say may take six to twelve months.[/ans][/faq]

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

Uday Kotak loses more than what he earned in 2023 as the bank’s shares slump

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

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The massive selloff in Kotak Mahindra Bank shares wiped out close to ₹40,000 crore of investor wealth on Thursday (April 25). Noticeably, the founder Uday Kotak, who owns nearly 26% stake in the bank bore the heaviest brunt from the sell-down.

The net worth of the country’s richer banker declined by $1.3 billion on Thursday — which was more than what he earned last year. According to the Bloomberg Billionaires Index, the banker’s fortune increased by $942 million in 2023 to $14.6 billion.

While his fortune swelled by $3.3 billion in 2019, during the next year it surged further by $1.6 billion to $16.4 billion. However, the years 2021 and 2022 were not so good for the banker as he witnessed a decline of $1.4 billion and $1.2 billion, respectively. The data further shows that his average net worth over the last three years stood at $14.4 billion.

Also Read: Uday Kotak forecasts global turbulence and prolonged high rates worldwide

Shares of Kotak Mahindra Bank tumbled 11% on Thursday after the Reserve Bank of India (RBI) banned the private lender from adding new customers through its digital channels and from issuing new credit cards. Thursday’s drop in the bank’s shares was the biggest single-day fall since March 2020. Analysts expect the RBI’s action will have a near-term drag on the lender’s shares.

According to Morgan Stanley, the impact on lender’s earnings will likely be limited over the next few quarters, as the bank is diversified and can accelerate growth in other segments to sustain earnings momentum. “We believe RBI’s move will weigh on the stock price in the near term,” said Morgan Stanley.

Additionally, the sell-off in Kotak Mahindra bank stock also resulted in its rival Axis Bank beating the former’s market capitalisation. However, it’s not for the first time that Axis Bank toppling Kotak Mahindra Bank in market valuation. Axis Bank had done so in September 2016 as well, when both the lenders had a market capitalisation of about ₹1.5 lakh crore.

Interestingly, Axis Bank was less than half the size of Kotak Mahindra Bank in November 2021. Since then, Axis Bank has added close to ₹1.5 lakh crore to its market valuation. In comparison, Kotak Mahindra witnessed a market cap erosion to the tune of ₹74,000 crore rupee during the same period.

Also Read: ‘Enjoying life as a private citizen’ — Uday Kotak on retirement

While the stock of Kotak Mahindra plummeted more than 10% in Thursday’s trade, shares of Axis Bank surged 6% after better-than-expected March quarter earnings bolstered investor sentiment. The gauge for bank stocks —the Nifty Bank index closed 1% higher at 48,494.95 points.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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