Kotak Mahindra Bank target price: Nomura India in its latest note said the changes made to the Kotak Mahindra Bank’s top management largely just increase the coverage of responsibilities of existing senior management personnel. This reinforces a degree of certainty around strategic continuity and, more importantly, management continuity at the bank, especially as it comes shortly after Ashok Vaswani has taken over as CEO.
The foreign brokerage views the developments positively, as it feels this has been one of the key concerns around Kotak Mahindra Bank, based on its conversations with investors.
"We believe such a rejig by KMB should possibly alleviate any immediate risk of top management attrition, but the new MD will still have the task of curbing attrition at the operational level, manage the ensuing asset quality risk, and hopefully review Bank’s strategic stance on business/branch expansion, investment portfolio rejig given higher share of AFS, sub-optimal dividend/capital consumption policy, stake reduction in subs, etc," said Emkay Global.
This brokerage has retained its 'Add' rating and a target price of Rs 1,950 on Kotak Mahindra Bank, implying 2.5 times Dec-25 core bank adjusted book value and Rs 480 value for subsidiaries.
KVS Manian, who is currently a Whole-time Director at Kotak Mahindra Bank Ltd, has been re-designated as the Joint Managing Director, with effect from March 1, 2024, subject to necessary approvals. It is important to note that recent media articles suggest that Federal Bank has shortlisted Manian as one of its CEO candidate. However, there has been no official communication by Federal Bank in this regard, Nomura India noted.
Shanti Ekambram, who is a Whole-time Director, has been re-designated as the Deputy Managing Director, with effect from March 1, 2024, subject to necessary approvals. Devang Gheewalla is set to become the new Chief Financial Officer (CFO), replacing Jaimin Bhatt (currently Group President and CFO) after he retires on March 31, 2024. Gheewalla (aged 56 years) is a Chartered Accountant and has been with the Kotak Group since 2004 and currently holds the position of President and CFO Banking. He has also been a part of the Key Leadership Team of Kotak since 2014.
Milind Nagnur, the current Chief Technology Officer (CTO), will also take on the additional role of Chief Operating Officer (COO) with effect from April 1, 2024. Besides, Paul Parambi, the current Chief Risk Officer of the bank, will be appointed as the Group Chief Risk Officer with effect from March 1, 2024.
"We will however watch out for any further developments on this front. Maintain Neutral," the brokerage said while suggesting a unchanged target price of Rs 2,040 on the stock.
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