Kotak Bank currently trades at 4.3 times of its fiscal 2022's price-to-book value and analysts believe that the premium valuation will continue given controlled credit cost, no material risk on asset quality and strong earnings momentum
MUMBAI: Market capitalisation of Kotak Mahindra Bank Ltd surged past ₹4 trillion on Wednesday, making it the second Indian lender after HDFC Bank Ltd to have achieved this milestone.
Shares of Kotak Mahindra Bank rose 1.1% in intraday to hit a record high of ₹2,022 apiece on the BSE, pushing the lender's market cap to ₹4.01 trillion. At 2.10pm, the scrip traded at ₹2,021. So far this year, the stock has risen 19%.
HDFC Bank is the nation's most valued lender, with a market cap of ₹7.90 trillion. Reliance Industries Ltd has a market cap of of ₹12.64 trillion followed by Tata Consultancy Services Ltd at ₹10.92 trillion, and then HDFC Bank Ltd.
Kotak Bank currently trades at 4.3 times of its fiscal 2022's price-to-book value and analysts believe that the premium valuation is likely to persist on account of controlled credit cost, no material risk on asset quality and strong earnings momentum.
It has shifted its focus to asset side, with emphasis on customer acquisition via organic or inorganic route to monetise its liability customers for advances. Analyst expects the change in strategy a positive.
"We await more details of the momentum of the strategy on its asset side and its faring at this juncture, the inroads is a positive. The deposit and advance strategy combined is likely to improve the NII and earning profile", said KR Choksey Institutional in a note to its investors.