Kotak Mahindra Bank share price drops amid report of stake sale by Canada Pension Fund

Shares of Kotak Mahindra Bank fell nearly 2 per cent in Friday's trade, only to recoup losses, on heavy volumes. Several reports suggested Canada Pension Fund, which held 8,63,10,661 shares or 4.34 per cent, stake in Kotak Mahindra Bank as of March 31, was looking to offload about 3.3 crore shares, or 1.6 per cent stake, in the private lender in the Rs 1,792-1,886 price band.

Kotak Mahindra Bank shares hit a low of Rs 1,855 on BSE, but were later trading at Rs 1,891.70, up 0.28 per cent. Foreign portfolio investors accounted for 39.43 per cent of the private bank's stake at the end of March quarter. Mutual funds owned another 10.99 per cent stake in the lender.

Kotak Mahindra Bank has an average price target of Rs 2,134, as per publicly available data with Trendlyne. This target suggests a potential 13 per cent upside for the stock ahead.

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Kotak Mahindra Bank's March quarter results saw a beat on net interest income (NII), fees, opex and credit cost. Analysts said the private lender has been posting back-to-back strong results, but felt earnings might be peaking for the bank.

Nuvama Institutional recently raised its target on Kotak Mahindra Bank to Rs 2,140 from Rs 1,980 earlier but has retained its 'Hold' on the stock. Emkay Global said it has upgraded its earnings estimates for Kotak Mahindra Bank by 10-12 per cent for FY24 and FY25 and introduced FY26E estimates.

"We expect KMB's RoA/RoE to normalise to 2.1 per cent/13 per cent from the high of 2.4 per cent/14 per cent in FY23 due to the normalisation of margins/LLP. We have lowered our price to ABV multiple to 2.8 times FY25E ABV, factoring in the ensuing top management change, and retained our target at Rs 2,000," it said.

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