As of March 2023, the top mutual fund holders of Kotak Mahindra Bank include:
1.SBI Mutual Fund – Holds approximately 7.52 crore shares valued at Rs 13,855 crore.
°Current value: Rs 12,600 crore.°Loss incurred: Over Rs 1,200 crore.
2.UTI Mutual Fund – Loss incurred: Around Rs 486 crore.3. HDFC Mutual Fund – Loss incurred: Rs 462 crore.
4. ICICI Prudential Mutual Fund – Loss incurred: Rs 461 crore.
Despite being major stakeholders in Kotak Mahindra Bank, these mutual funds have faced significant losses as the stock value declined.
Mutual funds lost Rs 4,281 crore when the stock of Kotak Mahindra Bank dropped by 10%. This happened after the RBI imposed a ban on the bank, preventing them from taking on new customers online or through mobile banking, as well as issuing new credit cards. The RBI’s decision was based on concerns about the bank’s technology platform following a two-year examination.
SBI Mutual Fund is currently the largest holder of Kotak Mahindra Bank shares as of March 2023, with approximately 7.52 crore shares worth Rs 13,855 crore, which has decreased to Rs 12,600 crore, resulting in a loss of over Rs 1,200 crore. Following SBI Mutual Fund, UTI Mutual Fund holds a significant stake in Kotak Mahindra Bank with a loss of around Rs 486 crore, while HDFC Mutual Fund and ICICI Prudential MF have experienced losses of Rs 462 crore and Rs 461 crore, respectively.
A total of 36 mutual funds are invested in Kotak Mahindra Bank stock, collectively holding around 25.63 crore shares valued at over Rs 47,229 crore as of March.
The Kotak Mahindra Bank stock experienced its sharpest decline since 1 April 2020, falling 10 percent due to regulatory action, causing investors to lose over Rs 35,200 crore in wealth.
Macquarie views the ban as a significant challenge for Kotak Bank, especially in terms of acquiring new digital customers. The bank’s digital platform, 811, experienced a notable increase in savings account openings and processed a lot of unsecured products digitally.
This growth outpaced the bank’s overall performance, showing a 40 percent increase in the first nine months of FY24 compared to the overall 18 percent growth.Citi analysts predict that the actions taken by the RBI will have an impact on the bank’s growth, net interest margin, and fee income.
They have given a ‘neutral’ rating with a target price of Rs 2,040 per share. Jefferies downgraded Kotak Mahindra Bank to ‘hold’ after the ban was announced and reduced the target price to Rs 1,970 per share. They believe that the resolution process could be similar to what HDFC Bank experienced, which took between nine to 15 months. If Kotak’s resolution process extends beyond six months, it could affect both revenues and costs for the bank.
Macquarie suggests that a ban on digital onboarding and limited branch expansion could impede medium-term growth for the bank, potentially leading to a de-rating comparable to HDFC Bank’s past experience. Despite these challenges, the bank maintains a ‘neutral’ outlook, setting a target price of Rs 1,860 per share.