Barclays sets a price target of Rs 540 for Kotak Mahindra Bank

Barclays has initiated coverage on Kotak Mahindra Bank with a price target of Rs 540, implying a potential 7% downside from Friday's closing price.

The stock is "fully valued" and the target is based on its historical 12-month forward price-to-earnings multiple of 18x, the analysts said.

"We believe [the bank's] strong management team, coupled with its emerging status as a relatively small private bank, indicates that its longer-term outlook is good," the analysts said, assigning the bank an 'Equal-weight' rating.

Kotak's presence in asset management and insurance segments increases chances of inorganic growth across the "entire financial services spectrum," the analysts added.