MUMBAI: The surprise resignation of Uday Kotak, which was announced four months ahead of the end of his tenure, has not altered analysts’ views about Kotak Mahindra Bank. Most analysts have maintained their ratings and kept target prices unchanged. Investors seemed to be unperturbed by Kotak’s decision to step down as shares of the private lender rose 1 per cent to Rs1,789 apiece on the Bombay Stock Exchange on Monday.
Goldman Sachs has maintained a ‘Buy’ rating on Kotak Mahindra Bank with a target price of Rs 2,624, which reflects a 48 per cent upside from the current market levels. The bank has underperformed due to investors’ concerns around the continuity of the management and the business strategy thereafter, said Goldman Sachs in a note.
Jefferies India has retained its ‘Buy’ rating on the counter with a target price of Rs 2,400 per share. Investec has maintained ‘Buy’ rating and retained the target price at Rs 2,300 a share.
The next big trigger for the market will be the name of a successor who will carry on the legacy of Uday Kotak say brokerages. The bank has already submitted two names for the CEO role to the Reserve Bank of India (RBI) and is waiting for the regulator’s approval.
“The decision of Kotak stepping down from executive role around four months ahead of the scheduled term has come as a somewhat negative surprise. Important to note is that Kotak would still remain associated with the bank as a non-executive director (thereby ensuring continuity),” said domestic brokerage house ICICI Securities.
“The key monitorable for the stock would be the candidature and transition of the new MD & CEO. Considering the culture at KMB, the promotion of an insider to the top job (vs a lateral hire) would be preferred by investors, in our view. There is no change in our earnings estimates,” it added. The brokerage has maintained ‘hold’ on the stock with the target price cut to `1,850 from `2,000 earlier. Brokerage firm Motilal Oswal Financial Services has retained ‘Neutral’ rating on the stock with a target price of `2,000 per share.