Kotak Mahindra Bank’s pursuit of top-3 spot poses M&A Risks: Bernstein

17 Oct 2024 CW Team

The brokerage noted that achieving this goal would likely require inorganic growth, given the difficulty of achieving the necessary profit growth through organic means alone. To surpass Axis Bank and secure the third spot, Kotak Mahindra Bank would need to grow profits at a rate 7% higher than Axis—a target Bernstein finds difficult to achieve without acquisitions.

Kotak Mahindra CEO Ashok Vaswani recently reiterated the bank's 2030 goal in an interview with the source, highlighting the focus on profit growth. However, Pranav Gundlapalle, head of India financials at Bernstein, warned that previous performance gaps between Kotak and Axis were driven by higher return on assets (RoA) rather than profit outperformance.

While inorganic growth options exist, they are limited. Gundlapalle highlighted IDBI Bank as a potential acquisition target, but noted that acquiring smaller banks might not immediately bridge the profit gap. “Pursuing the top-3 ambition aggressively may not guarantee a re-rating, as potential M&A risks could outweigh growth benefits,” he cautioned.

In FY24, Kotak Mahindra Bank’s consolidated profit stood at Rs 182 billion—30% lower than Axis Bank. Excluding credit costs, the profit gap widens to 35%. If Axis Bank maintains a 13% annual profit growth rate over the next six years, Kotak would need to grow profits at 20% annually to catch up by 2030.

Bernstein suggested that a merger with mid-level players like IndusInd Bank or IDBI Bank, or a combination of smaller banks like Federal Bank, Yes Bank, and IDFC First, could help Kotak close the gap. However, non-bank acquisitions are limited, and regulatory costs such as priority sector lending and cash reserve ratio requirements could weigh on profitability for any merged entity.

(ET)

Kotak Mahindra Bank's ambition to become India’s third-largest private sector lender by 2030 could expose it to significant merger and acquisition (M&A) risks due to integration challenges and weaker returns from smaller banks, according to Bernstein Research, part of Société Générale. The brokerage noted that achieving this goal would likely require inorganic growth, given the difficulty of achieving the necessary profit growth through organic means alone. To surpass Axis Bank and secure the third spot, Kotak Mahindra Bank would need to grow profits at a rate 7% higher than Axis—a target Bernstein finds difficult to achieve without acquisitions. Kotak Mahindra CEO Ashok Vaswani recently reiterated the bank's 2030 goal in an interview with the source, highlighting the focus on profit growth. However, Pranav Gundlapalle, head of India financials at Bernstein, warned that previous performance gaps between Kotak and Axis were driven by higher return on assets (RoA) rather than profit outperformance. While inorganic growth options exist, they are limited. Gundlapalle highlighted IDBI Bank as a potential acquisition target, but noted that acquiring smaller banks might not immediately bridge the profit gap. “Pursuing the top-3 ambition aggressively may not guarantee a re-rating, as potential M&A risks could outweigh growth benefits,” he cautioned. In FY24, Kotak Mahindra Bank’s consolidated profit stood at Rs 182 billion—30% lower than Axis Bank. Excluding credit costs, the profit gap widens to 35%. If Axis Bank maintains a 13% annual profit growth rate over the next six years, Kotak would need to grow profits at 20% annually to catch up by 2030. Bernstein suggested that a merger with mid-level players like IndusInd Bank or IDBI Bank, or a combination of smaller banks like Federal Bank, Yes Bank, and IDFC First, could help Kotak close the gap. However, non-bank acquisitions are limited, and regulatory costs such as priority sector lending and cash reserve ratio requirements could weigh on profitability for any merged entity. (ET)

Infrastructure Transport

01 Jun 2026

MMRDA advances 250 m on Orange Gate–Marine Drive tunnel

The Mumbai Metropolitan Region Development Authority (MMRDA) has completed 250 m of underground tunnelling for the Orange Gate–Marine Drive Urban Road Tunnel using India’s largest slurry shield tunnel boring machine (TBM) deployed for an urban road project.The project involves twin tunnels extending over 7 km beneath critical transport corridors, including Central Railway, Western Railway and Metro Line 3. The work requires high-precision engineering to navigate densely developed urban infrastructure.Once completed, the tunnel is expected to reduce travel time between Orange Gate and Marin..

Infrastructure Urban

01 Jun 2026

Hindustan Zinc Pays Rs 188.46 Billion in FY26

Hindustan Zinc contributed Rs 188.46 billion to the public exchequer in FY 2025-26, according to its 9th Tax Transparency Report. The contribution, equivalent to 46 per cent of the company’s revenue, included direct and indirect taxes, government royalties, dividends to the Government of India, withholding taxes and other statutory levies.The company’s five-year cumulative contribution to the exchequer stood at Rs 915.72 billion. In FY26, Hindustan Zinc reported revenue of Rs 408.44 billion, EBITDA of Rs 221.62 billion and profit after tax of Rs 138.32 billion. It also achieved its highest..

Infrastructure Urban

01 Jun 2026

World of Concrete India 2026 Opens in Mumbai

Informa Markets in India will host the 12th edition of World of Concrete India 2026 from 3–5 June 2026 at the Bombay Exhibition Centre, Mumbai. The specialised B2B exhibition will bring together manufacturers, suppliers, contractors, developers, architects, consultants, infrastructure companies, project leaders and government stakeholders.The event is expected to feature over 350 brands and more than 18,000 trade professionals. It will cover concrete and cement, dry mortar, precast technologies, formwork, construction chemicals, industrial and commercial flooring, scaffolding, safety solutio..