Kotak Mahindra Bank share price hits all-time high; see what Uday Kotak said about merger with Axis Bank

Kotak Mahindra Bank share price rallied over 6 per cent in Wednesday's trade to hit its all-time high after the private lender reported a 15.16 per cent yearly rise in standalone net profit at Rs 1,124 crore for the March quarter. It had reported Rs 976 crore profit in the year-ago quarter. 

Kotak Mahindra Bank share price rallied as much as 6.39 per cent to hit its lifetime high of Rs 1287.75 on the BSE. Kotak Mahindra Bank falls among top ten most valued firms in terms of market capitalisation, which has pushed behind the likes of largest public sector lender State Bank of India and ONGC. 

Kotak Bank has a market capitalisation of Rs 2,39,603.55 crore, which pipped the market value of State Bank of India (Rs 2,14,770.20) and ONGC (Rs 2,30,613.24). Uday Kotak-owned bank looks set to beat Infosys (Rs 2,61,614.74 crore) and Maruti Suzuki (Rs 2,64,407.66 crore). 

Edelweiss Securities has a buy rating on the stock with a target price of Rs 1,366, an upside of 6 per cent from its all-time high level.  

"We maintain our stance that Kotak Mahindra Bank has laid a strong foundation—liability franchise, digitisation, capital position and limited stress hit—for a scalable and profitable model. FY18 performance reflects synergy benefits playing through on cost as well as revenue fronts. With significant benefits likely to flow from formalisation of financial savings, we anticipate strong business tailwinds for subsidiaries. At CMP, the stock trades at 3.4 times FY20E P/BV," said Kotak Mahindra Bank. 

HDFC Securities has a target of Rs 1,371 on the stock. "Better than expected growth and increasing operating leverage will keep the stock buoyant," it said. 

Foreign brokerage Citigroup has an aggressive revised target of Rs 1,430 from Rs 1,230 earlier. The brokerage expects an upside of 11 per cent from stock's lifetime high level hit earlier in the day. 

"Kotak Bank showcased strong growth trends across bank and subsidiaries. It is steadily gaining market share in main banking business, and is one of the better diversified financial services play," Citi said in its results review report.

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On Monday, Kotak Mahindra Bank Board re-designated Uday Kotak as the Managing Director and Chief Executive Officer (CEO) of the bank. According to a CNBC TV 18 report, he may not have directly commented on rumours of Kotak Mahindra Bank's merger with Axis Bank, but he indicated he is open for "inorganic growth". "We are open to looking at inorganic growth as long as it is sensible," he said. 

Recently global brokerage Nomura made a case for Kotak Mahindra Bank acquiring/merging with Axis Bank. "With a very short time left in the CEO’s term at Axis Bank (nine months), RBI’s pressure on Axis Bank’s management/board and with an asset quality clean-up exercise continuing, we believe this is the best opportunity for Kotak Bank to acquire/merge with Axis Bank," the Nomura report said.