April 17: Kotak Mahindra Bank Ltd became India’s second most valued bank for the first time after its shares surpassed that of India’s largest lender, the State Bank of India. Shares of the private sector bank rose to a record high today after closing on Monday.
With a market capitalization of Rs 2,22970.40 crore, shares of Kotak Mahindra Bank closed at 1.88% on Monday to a record high of Rs 1170.05. The shares also climbed to an all-time of high of Rs 1174 apiece earlier on Monday.
Kotak’s market cap is now second only to HDFC Bank Ltd, whose market capitalization stood at Rs 5.04 trillion. SBI, whose market cap stood at Rs 2,22,043.74 crore, had its shares trading at Rs 248.80 on BSE, down by 1% from its previous close.
The Uday Kotak-promoted bank had displayed continued improvement in business growth. This along with stable asset quality and negligible restructured assets have surged the buying shares of Kotak Mahindra Bank. With Kotak’s non banking operations tipped to attain robust growth in the future, investors are expecting the strong traction in earnings to continue.
At the same time, shares of SBI along with other nationalized bank fell steadily after fraudulent banking transaction was reported by Punjab National Bank in February. Retail banks enjoyed a steady advantage over the years until the matter came to light. Following the incident, SBI shares had declined nearly 10%. This was on top of the increased pressure the bank had been facing after it reported a surprise loss of Rs 2416 crore for December quarter.
Shares of Kotak Mahindra Bank have rallied 33% in the previous year, while it was a 15% decline for the stocks of SBI for the same period. Other private sector lenders including HDFC Bank and IndusInd have also shown robust growth over the past year.