Shares of Kotak Mahindra Bank rallied 2% on Tuesday after the private sector lender rejigged top management, elevating KVS Manian as joint managing director and Shanti Ekambaram as deputy MD.
This follows shortly after Ashok Vaswani took over as MD and CEO of the bank on January 1, 2024, following Uday Kotak’s retirement. Manian and Ekambaram are currently Whole-time Directors at the bank.
News reports had suggested that Manian could be one of the candidates for the MD & CEO post due to be vacated in September this year at Federal Bank, but the reshuffle should potentially eliminate any such risk.
Besides, Devang Gheewalla is set to become the new Chief Financial Officer (CFO), replacing Jaimin Bhatt (currently Group President and CFO) after he retires on March 31, 2024.
Milind Nagnur will now hold the dual position of CTO & COO at Kotak Bank.
“We believe such a rejig by KMB should possibly alleviate any immediate risk of top management attrition, but the new MD will still have the task of curbing attrition at the operational level, manage the ensuing asset quality risk, and hopefully review Bank’s strategic stance on business/branch expansion, investment portfolio rejig given higher share of AFS, sub-optimal dividend/capital consumption policy, stake reduction in subs, etc,” said Anand Dama of Emkay Global.
Analysts say the rejigs in top management largely just increase the coverage of responsibilities of existing senior management personnel.
“This reinforces a degree of certainty around strategic continuity and, more importantly, management continuity at the bank, especially as it comes shortly after Mr. Vaswani has taken over as CEO. We view this positively, as this has been one of the key concerns around KMB, based on our conversations with investors. We will however watch out for any further developments on this front,” Nomura said.
The Japanese broking firm has maintained a neutral rating on the bank with a target price of Rs 2,040. Emkay has an Add rating on the stock with a target price of Rs 1,950.
The Nifty stock, which has lost 9% of its value amid management transition-related worries, touched a high of Rs 1,762 on BSE.
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