Uday Kotak loses Rs 123,05,53,25,680 in this private banking stock in just 1 day; stock hit lower circuit & 52-week low: Here's Why

How did Uday Kotak lose Rs 12,305 crore in just 1 day?

The Indian stock market commenced trading on a downbeat note today as both key indices, the BSE Sensex and NSE Nifty-50, witnessed a decline of around 0.3 per cent. Notably, Kotak Mahindra Bank emerged as a major loser, featuring among the top decliners on both the Sensex and Nifty-50 indices.

Today, shares of Kotak Mahindra Bank plunged 240.8 per share or 15 per cent circuit to Rs 1,602 per share from its previous closing of Rs 1,842.80 per share. The stock also touches a 52-week low of Rs 1,602 per share.

What happened to this stock?

The Reserve Bank of India (RBI) barred Kotak Mahindra Bank (KMB) from onboarding new customers through online and mobile banking channels and issuing new credit cards due to serious deficiencies found in the bank's IT systems over the past two years. These shortcomings included IT inventory management, data security, and disaster recovery plans. The deficiencies resulted in frequent outages, including a recent one on April 15th, causing inconvenience for customers. Despite RBI's efforts to work with KMB on improvements, the bank failed to adequately address the concerns. While existing customers are unaffected, the ban will likely hurt KMB's ability to acquire new customers and grow its credit card business.

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How did Uday Kotak lose Rs 12,305 crore in just 1 day?

The promoter of the company Uday Kotak owns 51,10,27,100 shares or 25.17 per share stake in the company. Therefore 51,10,27,100 shares x Rs 240.3 per share = Rs 123,05,53,25,680 in just 1 day.

Kotak Mahindra Bank, a major Indian financial services group, offers a variety of banking and financial products like personal banking, corporate banking, investment banking, insurance, and wealth management. The bank has a wide branch network across India, with a presence in metro, urban, and rural areas, and even has an international branch in Dubai. With over 32 million active customers, Kotak Mahindra Bank is a prominent player in the Indian financial sector. The company has a market cap of over Rs 3 lakh crore with a PE of 18.9x and an ROE of 14.3 per cent.

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Disclaimer: The article is for informational purposes only and not investment advice.