Kotak Mahindra Bank stock falls after Bombay HC rejects stake sale dilution announced in August

Kotak Mahindra Bank Q3 review: An ideal long-term compounding candidate

The Kotak Mahindra Bank stock fell in trade today after the Bombay High Court rejected its stake sale dilution announced in August and said it would hear the case next on January 17.

Kotak Mahindra Bank stock falls after Bombay HC rejects stake sale dilution announced in August

The stock fell up to 3.66% to 1,209.30 compared to its previous close of 1,255.25 on the BSE. The large cap stock has been losing for the last two days and fallen 4% during the period.

The stock has gained 20.09% since the beginning of this year and risen 17.77% during the last one year.

22 of 34 brokerages rate the stock “buy” or ‘outperform’, nine “hold” and two “underperform” or one “sell”, according to analysts’ recommendations tracked by Reuters.

The RBI has given December 2018 as deadline for Kotak Mahindra Bank’s promoters to pare their stake in the lender. The bank’s promoters need to bring down ownership from 30.02% to just under 20% by December.

In case, the deadline is not met, the bank could seek an extension of the deadline to March 31, 2019, to lower promoters’ stake.

The RBI had asked the bank to lower the promoter holding to less than 20 per cent by December 2018 and 15 per cent by March 2020.

In August, it had tried to lower the holdings through a complex perpetual non-cumulative preference shares sale but did not make the regulatory cut.

The private lender on December 10 challenged in court the Reserve Bank of India’s (RBI) decision to not allow its promoter to issue preference shares to reduce stake in the private-sector lender but the court refused to stay the apex bank’s decision to not allow promoter stake sale in Kotak Mahindra Bank, news channel CNBC TV18 reported on Monday.

In the petition, the bank sought widening of the definition of the paid-up equity capital to include these preference shares as well beyond the present equity voting capital. It also questioned the laws related to the capping of the shareholding at a more fundamental level, asking if there was a legal basis to have shareholding caps.

source: businesstoday