KOTAK MAHINDRA BANK SHARES FALL 4% TO FRESH 52-WEEK LOW ON ANOTHER BAD NEWS

Kotak Mahindra Bank shares fell 4% to hit a fresh 52-week-low of Rs 1,561 on Thursday after the private lender delivered the bad news of the resignation of Joint Managing Director KVS Manian. Domestic brokerage Nuvama has downgraded the stock to reduce from buy.

Kotak shares had ended last week 10% weaker after RBI restricted the bank from onboarding new customers through online and mobile banking channels and issuance of fresh credit cards.

Manian's exit comes after the departures of CEO Uday Kotak and Joint MD Dipak Gupta due to RBI's cap on tenures of whole-time directors.

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"Losing a long standing KMP is a negative amid many KMP exits in the last one year and on the back of RBI’s recent ban on Kotak. With a relatively new CEO, many senior exits bunched up over six months, higher-than-industry attrition rate and RBI’s digital ban highlighting that digital prowess that the bank flagged off as a key strength is lacking as viewed by the regulator, we downgrade to ‘REDUCE’ from ‘BUY’," Nuvama analysts said.

The brokerage believes that recent changes shall hurt growth and profit at least for 12–18 months. It has also reduced the target price from Rs 2,095 to Rs 1,530.

Jefferies has maintained a hold call on Kotak with a target price of Rs 1,970 saying that senior-level exits can affect growth and valuations. Macquarie has maintained a neutral rating on Kotak Bank with a target price of Rs 1860.

Earlier in February, Kotak elevated Manian and Ekambaram to joint MD and deputy MD, respectively, effective March 1. At that time, banking analysts suggested that this was done to pre-empt the potential exit of senior officials from the bank.

Manian is said to be taking up an offer from Federal Bank as MD and CEO.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)