Earlier in the day, Kotak Mahindra Bank shares climbed 1.8% to an all-time high of Rs1,170.15 apiece. Photo: Mint
Mumbai: Shares of private lender Kotak Mahindra Bank Ltd on Monday beat India’s largest lender State Bank of India (SBI) for the first time to become the second most valued bank in the country.
Data from BSE showed that Kotak Mahindra Bank has a market capitalization of Rs2,22,560.69 crore, after its shares rose 1.7% on Monday. Earlier in the day, Kotak Mahindra Bank shares climbed 1.8% to an all-time high of Rs1,170.15 apiece.
SBI market capitalization stood at Rs2,22,043.74 crore. Its shares were trading at Rs248.80 on BSE, down 1% from its previous close.
HDFC Bank Ltd remained country’s most valuable bank with a market capitalisation of Rs5.04 trillion.
Investors buying shares of Uday Kotak-promoted lender Kotak Mahindra Bank due to a continued improvement in business growth, stable asset quality with net non preforming assets of 1% ratio and negligible restructured assets. Investors also expects that going ahead its non banking operations will continue to give robust growth in future.
“Kotak Bank has undoubtedly proven its competitive edge over its private sector peers with higher fee income, superior asset quality management and effective management of financial business arms. It continues to witness moderation in SMA-2 balance, which clearly suggests a stable trend on asset quality front. Looking ahead, we expect strong traction in earnings to continue owing to robust growth in loan book, moderate credit cost and healthy margins,” said HDFC Securities in a 19 January note.
Of the 37 brokers tracking the Kotak Mahindra Bank stock on Bloomberg, as many as 26 recommended a “buy” rating, four asked its investors to “sell” the stock and 7 have a “hold” rating.
Shares of SBI along with other public sector banks fell after Punjab National Bank on 14 February reported that it detected fraudulent banking transaction at one of its branches in Mumbai.
After the PNB fraud came to light, SBI shares declined nearly 10%, while Nifty PSU Bank index slumped 18.4%. Since then many banks reported exposure to this fraud and police arrested various public sector bank employees and top management of private sector.
SBI stock had already been under pressure after the bank reported a surprise loss of Rs2,416 crore for December quarter as its bad loans and provisions spiked.
“SBI earning for December quarter underscores the challenges in asset quality albeit moderation in the pace of NPL accrual. The group would benefit from the NPL resolution underway through insolvency proceedings. However, the overhang from stressed assets not recognised as impaired, headwinds to margin outlook in the near term, and moderation in growth imply protracted time for the group to deliver normalised level of earnings and profitability,” said brokerage firm IIFL Institutional Equities in a 12 February note.
Of the analysts covering SBI stock, 42 have a “buy” rating, six have a “hold” rating, while two have a “sell” rating, shows Bloomberg data.