Kotak Mahindra Bank shares are likely to remain in focus after global brokerage Morgan Stanley reaffirmed its ‘Overweight’ rating on the stock and retained its target price of Rs 500, implying potential upside from current levels. The brokerage’s positive stance comes after Kotak Mahindra Bank announced the proposed acquisition of Deutsche Bank India’s retail banking, private banking and wealth management businesses, a move that Morgan Stanley believes is strategically aligned with the lender’s efforts to strengthen its affluent and SME banking franchise.
Morgan Stanley on Kotak Mahindra Bank
- The brokerage maintains Overweight with a target price Rs 500
- Kotak Bank proposed acquisition of Deutsche Bank India‘s retail banking, private banking and wealth management business on slump sale basis
- Transaction brings Rs 290 billion loans with over 90 per cent secured, Rs 160 billion deposits, around 150,000 customers and Rs 105 billion of wealth assets under management
- Consideration is Rs 2.8 billion plus closing net assets; completion expected by September 2027 subject to regulatory approvals
- Transaction expected to be return on equity accretive; common equity tier-1 capital impact estimated at around 84 basis points
- Aligns with Kotak’s strategy to build affluent and small and medium enterprise banking franchise
- Morgan Stanley views transaction as prima facie attractive but awaits more details on profitability and timelines
Kotak Mahindra Bank – Deutsche Bank Acquisition
Kotak Mahindra Bank will acquire the retail and private banking business of Deutsche Bank in India for Rs 282 crore, the lender said on June 30.
Kotak Mahindra Bank said the business being acquired has a loan book of around Rs 29,000 crore, deposits of about Rs 16,000 crore and assets under management (AUM) of nearly Rs 10,500 crore. The acquisition covers a customer base of around 1.5 lakh across India, while about 1,000 Deutsche Bank India employees are expected to join Kotak upon completion of the transaction.
The bank said the acquisition strengthens its focus on the affluent and SME segments, while bringing a high-quality customer franchise and experienced teams. Deutsche Bank said the transaction aligns with its strategy to sharpen its portfolio and focus on its core businesses.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
