MUMBAI: Shares of Kotak Mahindra Bank gained around 6% on Wednesday after the lender launched its qualified institutional placement (QIP) offering to raise up to ₹7,500 crore.
Kotak Mahindra Bank closed at ₹1,216.75 on the BSE. The shares rose as much as 8% intraday, while the benchmark index, Sensex gained 3.3% to 31,605.22.
The bank has set a floor price of ₹1,147.75 per share for the offering. As per Securities and Exchange Board of India (Sebi) norms, the bank can offer a maximum discount of up to 5% on the floor price to investors.
Investment banks Goldman Sachs, Morgan Stanley, Kotak Mahindra Capital and SBI Capital Markets are advising Kotak Mahindra Bank on the deal.
The bank will use the proceeds to bolster its balance sheet as covid-19 is expected to lead to asset quality issues. It will also tap opportunities arising out of the crisis.
Provisions and contingencies of the lender surged to ₹1,047.47 crore for the March quarter from ₹171.26 crore a year ago. General provision for covid-19 stood at ₹650 crore, while the provision towards advances/others (including provisions for exposures to entities with unhedged foreign currency exposures) was ₹3,73.72 crore.
Asset quality improved with gross non-performing assets seeing a decline of 7% quarter on quarter to ₹5,026.9 crore at the end of March. Gross NPA as a percentage of total assets stood at 2.3% as on 31 March as against 2.5% in the previous quarter.
