Kotak Mahindra Bank shares jump 6% on reaching agreement with RBI on promoter stake

NEW DELHI: Shares of Kotak Mahindra Bank jumped nearly 6 per cent in Friday’s trade after the RBI gave it in-principle approval to bring down promoter holding to 26 per cent from 30 per cent.

This is against an earlier requirement of bringing down the stake to 20 per cent by December 2018 and 15 per cent by March 2020.

Following the development, the scrip rose 5.64 per cent to hit a high of Rs 1,720 on BSE.


Motilal Oswal Securities said the settlement takes away one of the key overhangs on the stock and brings the focus back on the fundamental performance of the bank.

“Recently, KMB has shown signs of moderation in its business growth due to weaker trends in the corporate banking and CV/CE portfolio and an uptick in stress in certain business segments,” the brokerage said, while maintaining a neutral stance on the stock.

Morgan Stanley said that the development has reduced overhang around significant equity supply. It feels that it could be the near-term catalyst for the re-inclusion of the stock in MSCI.

According to the agreement, promoter’s voting rights would be capped at 15 per cent of the capital, irrespective of the level of his ownership. This will make the higher stake less effective in terms of overall governance but economically beneficial.

The shares of the company closed 3.75 per cent higher at Rs 1689.15 on BSE.