Retain 'buy' on Kotak Mahindra Bank - TP Rs.793 - Geojit BNP Paribas Financial Services

- Buy rating on Kotak Mahindra Bank is maintained with a target price of Rs.793. Currently, the stock is traded in the range of Rs.638.

- The bank is making a preferential placement of 20 million shares to institutional investors at a price of Rs.648 per share.

- The bank's Tier 1 capital at 14% is already high. High Tier 1 capital under Basel 3 is very welcome but it has not been utilizing excess capital very effectively due to lack of opportunities.

- Further, the deal is book accretive and adds another marquee investor that is positive.

- The preferential placement is making to reduce promoter's holding. Post the issue, banks Tier 1 capital to increase to 15-16% and promoter's holding to come down from 41.02 to 39.5%.

Source : Equity Bulls

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