Kotak Mahindra Bank: Kotak Bank shares gain after RBI lifts curbs

Mumbai: Kotak Mahindra Bank gained as much as 2.5% in Thursday’s trading after the RBI on Wednesday lifted restrictions on its digital lending operations after almost 10 months. Gains were limited as the recent run-up in share price had baked in the optimism around the removal of the restrictions. The stock closed 1.1% higher at ₹1,964.75 on Thursday.

“The lifting of restrictions was anticipated by the market to happen sometime soon which is why the gains in the shares were capped today, but the news did improve investor sentiment,” said Kaitav Shah, lead BFSI analyst at Anand Rathi Institutional Equities.

Shah said Kotak’s shares outperformed bank stocks in the past month after its better-than-expected earnings.

In the last month, Kotak Bank shares have surged 13% while the Bank Nifty rose 2.7% in the same period.

In April 2024, the central bank took supervisory action on Kotak Bank, directing the lender to “cease and desist” onboarding new customers through the bank’s online and mobile banking channels and issuing fresh credit cards with immediate effect.

“The lifting of the embargo is positive as it will enable the company to resume growth in the unsecured segments, particularly credit cards, alongside source customers from the digital channel and the app,” said Dnyanada Vaidya, research analyst-BFSI, Axis Securities.Vaidya said clarity on the bank’s growth approach in the wake of asset quality challenges is awaited.Shah said investors must buy only after considering the growth in the subsequent quarters.

Vaidya said existing investors could continue to hold the stock and accumulate on dips. “Despite the sharp run-up in the stock, especially post Q3 results, we continue to believe that current valuations are attractive and warrant a further upside, said Vaidya.

“The lifting of the embargo was one of the key positive triggers for the stock and should aid earnings growth and valuation catch-up for the bank.”