If you are invested in Kotak Bank then, you need to read this article. Today this bank crashed 10%. What is the fresh price target? should we hold or sell let’s see the details below.
Over the past few years, Kotak Mahindra Bank has been rapidly expanding its credit card business and gaining a sizable user base because to its 811 digital approach.
The RBI’s decision to forbid the private bank from accepting new clients through its online and mobile banking channels caused Kotak Mahindra Bank Ltd.’s shares to plummet by more than 10% during Thursday’s trading. Additionally, Kotak Mahindra Bank was prohibited by the regulator from issuing new credit cards, which caused a precipitous decline in the counter.
In early trade on Thursday, Kotak Mahindra Bank’s share price fell by 10% after punitive measures taken by the Reserve Bank of India (RBI) against the bank. On the BSE, Kotak Mahindra Bank shares fell as much as 10%, to ₹1,658.75 a share.
The private sector lender’s ability to issue new bonds has been restricted by the central bank in 2022 and 2023 because of flaws in the bank’s IT system.
Kotak Mahindra Bank distributed over 95% of new credit cards and 99% of new personal loans online in the quarter that concluded in December 2023. Furthermore, 76% of accounts for fixed deposits or recurring deposits and 90% of new investments were formed online. According to Citi, the bank’s credit card portfolio accounted for 3.7% of advances.
Conclusion
On the other hand, CLSA thinks that, unless the ban is extended, the effect of this bank on the bank’s earnings will probably be minimal. The brokerage emphasized that a significant portion of the users on Kotak Mahindra Bank’s digital platform, “811,” are low-value clients. As a result, with just 8% of total savings deposits, the digital platform’s share is still rather small. Despite its explosive development, Kotak Bank’s credit card business accounts for just 4% of its overall loan book. CLSA anticipates that these divisions will contribute to profit in the high single digits in Q4FY24 due to their greater return on assets (ROA) operations.
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