Back to back woes for Kotak Mahindra Bank have led brokerages turn cautious on the stock. In a fresh update, Nuvama has downgraded Kotak Mahindra Bank’s stock to Reduce from a Buy rating earlier and has slashed its target price by 27% from the earlier target of Rs 2,095. Nuvama now has a target price of Rs 1,530 for Kotak Mahindra Bank shares, this implies a nearly 6% decline from its CMP of Rs 1,632 on the NSE. The downgrade comes after KVS Manian, Joint Managing Director and board member of the bank has tendered his resignation on April 30, after serving the bank for nearly 29 years.
Just a week back, the Reserve Bank of India (RBI) had asked Kotak Mahindra Bank to stop issuing fresh credit cards and onboarding any new customers via digital channels — which led to a 10% in the share price of the bank.
“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’. We believe the recent changes shall hurt growth and profit at least for 12–18 months. We cut target multiple sharply to 1.7x PBV FY26E from 2.2x. Our new TP is INR1,530 versus INR2,095 earlier,” said brokerage firm Nuvama in its latest note.
Nuvama expects Kotak Mahindra Bank shares to full farther, despite a sharp correction in the recent past and recommends switching to ICICI, Axis, IIB, HDFC Bank (for a 1Y-plus horizon), and a few select NBFCs including Shriram Finance.
