Shares of Kotak Mahindra Bank Ltd. have opened 2.1 per cent lower after the lender saw a top-level exit on Tuesday. KVS Manian, recently elevated as Joint Managing Director, resigned with immediate effect on Tuesday.
The board of private lender has accepted Manian’s resignation, the bank told the exchanges in a regulatory filing.
His resignation came days after Kotak Mahindra Bank was barred by the Reserve Bank of India (RBI) from onboarding new customers online or issuing new credit cards. The stock is down 11 per cent in the last five days. In pre-open trade, shares of Kotak Mahindra Bank were trading 0.79 per cent lower at Rs 1,611 on BSE.
What Should Investors Do Now?
Brokerage firm Jefferies retained its “hold” rating on the stock with a price target of ₹1,970 per share. It said that it will watch for more senior and mid-management exits from the lender and if that happens, it can add to the drag from RBI restrictions.
Jefferies also said that senior-level exits can affect the bank’s growth and valuations.
Nomura India said there will be a reputational impact on Kotak Mahindra Bank Ltd post the RBI move. It would watch out for how the matter resolves itself, especially considering the strongly worded nature of RBI’s press release, the brokerage said.
In his resignation, Manian said he was exploring other opportunities in the financial sector.
“The variety of assignments handled during my career with the company have enriched me as a professional. I was truly fortunate to have had the opportunity to work with colleagues with brilliant minds and unlimited passion to imagine and achieve things that are out of the ordinary. There are just too many of such people to be named in such a short letter,” he said.
Manian said he had a short stint working with CEO Ashok Vaswani but believes the path ahead for the bank “is truly transformational.”
Nuvama has downgraded the stock to “reduce” citing back-to-back negative developments, from its earlier rating of “buy” and also cut its price target to Rs 1,530 from Rs 2,095 earlier.
The brokerage said that many senior exits have bunched up over six months and the recent changes shall hurt the lender’s growth and profit over the next 12-18 months.
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