The stock of Kotak Mahindra Bank declined 3.62% on Thursday to hit a three-month low of Rs 1,244.90 on Thursday on the BSE after the lender said the Reserve Bank of India (RBI) had rejected its proposal to issue non-convertible preference shares to reduce promoter holding.
The stock of Kotak Mahindra Bank declined 3.62% on Thursday to hit a three-month low of Rs 1,244.90 on Thursday on the BSE after the lender said the Reserve Bank of India (RBI) had rejected its proposal to issue non-convertible preference shares to reduce promoter holding. During the day, it plunged 3.82% to Rs 1,242.25. On NSE, shares of the company slumped 3.71% to close at Rs 1,245. The stock was the worst-hit among the blue-chips on both the key indices during the day. In an exchange filing on Tuesday after market hours, Kotak Mahindra Bank said RBI has communicated to them that their perpetual non-cumulative preference share (PNCPS) issuance does not meet their promoter holding dilution requirement.
Kotak Mahindra Bank on August 2 had sold non-convertible perpetual non-cumulative preference shares worth Rs 500 crore to domestic institutional investors, reducing its promoter holding to 19.70% of the paid-up capital. As of June 2018, Uday Kotak held 29.7% stake in the lender. Last year, the Reserve Bank of India ordered the bank’s promoter Uday Kotak to cut his ownership of the bank in phases to below 20% by 2018 and 15% by March 31, 2020. To enable Uday Kotak to bring down his stake to RBI mandated levels the private lender had come with a qualified institutional placement (QIP) and raised Rs 5,803 crore in May 2017.
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Analysts are quite bullish on the stock, “The fundamentals remain strong this correction is only because of issues with preference share allotment. This is a great time to pick up the stock otherwise you don’t find Kotak’s stock correcting by 3.5%,” said an analyst requesting anonymity. Since the beginning of 2018, Kotak Mahindra Bank’s stock rose by 23.37%. The benchmark Sensex rose by 10.59% during the same period. Of the 39 analysts who track the stock, 29 has given it a ‘Buy’, five have a ‘sell’, and five have a ‘hold’.