Kotak Bank: Federal Bank shares dropped by 7.97 percent, reaching a low of Rs 150 on the BSE. Meanwhile, Kotak Mahindra Bank shares were trading 0.84 percent higher at Rs 1,746.05 on the BSE.
Federal Bank Ltd witnessed an 8 percent plunge in its shares during Tuesday’s trading session. This drop came as Kotak Mahindra Bank announced changes to its top management, including a shift in the role of director KVS Manian. Manian was reportedly one of the three individuals shortlisted by Federal Bank for the CEO position.
According to a media report, earlier indications pointed to Manian and two other internal candidates being identified for the MD and CEO positions. The Kochi-based lender was anticipated to submit these names to the RBI shortly, as per the report.
KVS Manian, who presently serves as a full-time director, will be re-designated as the Joint Managing Director, effective from March 1, 2024, pending necessary approvals. It’s worth noting recent media reports indicating that Federal Bank has identified Mr. Manian as one of its CEO candidates. However, is further clarification needed on this matter.
Nomura India noted in a statement that there has been no official communication from FB regarding this matter.
Federal Bank shares dropped by 7.97 percent, reaching a low of Rs 150 on the BSE, while Kotak Mahindra Bank shares saw a 0.84 percent increase, trading at Rs 1,746.05 on the BSE. Kotak Institutional Equities has given a Buy rating on Federal Bank with a target price of Rs 165. Antique Stock Broking has set a target of Rs 190 for the stock, while Motilal Oswal predicts the Federal Bank stock to reach Rs 175.
Kotak Bank rejig sends Federal Bank shares down 8% today. Here is why
In the March quarter, the private lender experienced a contraction in net interest margin (NIM), a trend that Geojit anticipates will persist for the next two quarters. Nonetheless, the bank remains optimistic about its long-term performance, citing advanced growth as a key factor, as stated last month.
In a separate note last month, YES Securities mentioned that the bank’s goal is to reduce the CD ratio to 80 percent by the end of the calendar year 2024. This reduction could potentially exert downward pressure on NIM, assuming all other factors remain constant. The note further stated that there is no anticipation of an increase in deposit rates, except possibly in certain segments. Overall, the cost of deposits is expected to remain relatively stable and may gradually decrease. Additionally, the growth of unsecured loans is not currently as rapid as the bank’s capacity, but this is expected to be enhanced at some point in the future.
