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Uday Kotak sells 2.83% stake for Rs 6,940 cr, brings down shareholding closer to RBI mandated limit

Billionaire banker Uday Kotak sold 2.83% of his holding in Kotak Mahindra Bank today, bringing his shareholding to 26.1% from 28.93%, closer to what was agreed with the Reserve Bank of India (RBI) earlier this year. Uday Kotak raised Rs 6,940 crore, by selling close to 5.5 crore shares at the upper price limit of Rs 1,240 per share, according to Bloomberg news. The stake dilution was carried out through a private placement by way of a block deal on June 2. Shares of Kotak Mahindra Bank surged over 7% on BSE Sensex on Tuesday morning to trade at Rs 1,330 per share.

The stake sale comes just a day after Kotak Mahindra Bank successfully raised Rs 7,442 crore by issuing 65 million shares of the lender at a discounted price of Rs 1,145 per share via a Qualified Institutional Placement (QIP). The QIP saw marquee investors such as Invesco Oppenheimer buy 52 lakh shares, followed by Canada Pension Plan Investment Board, picking up 46 lakh shares, and ICICI Prudential Mutual Fund getting hands-on close to 41 lakh shares. Uday Kotak’s decision to pare-off shareholding is in line with the approval granted by the Reserve Bank of India earlier this year.

In January, Kotak Mahindra Bank had informed the market regulator that the central bank had granted in-principle approval for an offer to cap promoters voting rights in the lender to 20% of paid-up voting equity share capital (PUVESC) until March 31, 2020. “Promoters’ voting rights in the Bank to be capped to 15% of PUVESC from April 1, 2020, onwards,” the bank had said in January.

Kotak Mahindra Bank was asked by the RBI to cut promoters shareholding to 20% of paid-up capital by December 31, 2018, and to cut it further to 15% by March 31, 2020. The lender followed-up with a proposal to cut promoter holding to 19.70%, which was rejected by the central bank. Kotak Mahindra Bank had challenged the RBI in relation to this matter in the Bombay High Court. RBI’s bank licensing rules ask private banks to pare promoter holdings to 40% within three years, 20% within the ten years, and 15% in 15 years. The court case was withdrawn by the bank in February.

Currently, Kotak Mahindra Bank shares have jumped 20% from March lows and is one of the most expensive bank stocks in the Indian equity market. The stock however has a hold rating from Emkay Global which highlighted that the QIP is likely to result in subdued Return on Equity. Motilal Oswal has a neutral rating on the stock.

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Yes Bank share price gains 4% after Madhu Kapur group steps down as promoters

Yes Bank share price gained 4.2 per cent to Rs 28 apiece on BSE in Monday’s strong trade as the bank informed the bourses about the reclassification of shareholding after Madhu Kapur group has consented to be categorised as public stakeholders. From it’s March low of Rs 5.55, the stock has skyrocketed over 400 per cent. The Madhu Kapur group which includes Madhu Ashok Kapur, Shagun Kapur Gogia Gaurav Ashok Kapur and Mags Finvest Private Limited, agreed to give up their status as Yes Bank promoters and reclassify their shareholding in the bank as non-promoter shareholders or public shareholders, Yes Bank said in a BSE filing on Saturday.

Around 1.15 PM, Yes Bank shares were trading at Rs 27.25, with a gain of 1.30 per cent as compared to a 3.60 per cent rise in S&P BSE Sensex. The stock opened at Rs 27.75 and touched an intraday high and low of Rs 28 and Rs 27, respectively, in the session so far. The stock quoted a 52-week high of Rs 157 in May 2019. From May 29, the private lender will not be available for trading in Futures & Options (F&O) segment. Yes Bank co-founder Rana Kapoor is in police custody on the alleged charges of corruption and financial mismanagement.

Yes Bank was bailed out by the State Bank of India-led equity consortium formed with six other lenders with a capital infusion of Rs 10,000 crore. Besides, a private lender on Sunday announced to restructure the salaries for the senior leadership team under which 30 per cent of the total cost to company (CTC) will be moved to the variable pay category for the financial year 2020-21, according to a PTI report.

In another development, Yes Bank informed in BSE filing that the private lender has acquired a 24.19 per cent stake Dish TV India by invoking pledged shares. Dish TV had kept 44.53 per cent equity as collateral with the lender against loans. “Yes Bank has acquired 44,53,48,990 equity shares having nominal value of Rs 1 per share, constituting approximately 24.19 per cent of the post-issue paid-up share capital as at March 31, 2020, of a listed company, namely, Dish TV India Limited,” the lender said in a release.

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Coal India share price up 10% in 5 days; a stock to bet on as India’s power demand gets back on track?

A heatwave spreading across north India and the steady resumption of economic activity has caused a sharp spike in the country’s energy consumption, with this Coal India’s share price has also surged 10% in the last five days. According to Morgan Stanley research, the daily energy consumption in India is now closer to 2019 levels. Resumption of economic activity and revival in energy consumption is being dearly eyed by Coal India’s management, as highlighted in a conference call the firm recently held. As the benchmark indices traded in the red on Friday, Coal India shares jumped 3% to trade at Rs 138 per share.

Coal India has trimmed production with the build-up in inventory stocks across mines and power plants. However, the company said it is committed to resume production once demand picks up. Dispatches for coal have increased over the past one week, as power demand recovers and factories restart operations. Offtake is now being recorded at 1.35mnte per day from 1.1mnte per day, recorded last month. The firm’s production target was set at 710mnte for the current fiscal year which is being re-evaluated.

The future could also be bright for Coal India as the company aims to substitute 100mnte thermal coal imported by Indian, which can help improve off-take. 18mnte of coal has been auctioned till date for imported coal substitution, and another 20-25mnte is lined up. This will also help the company become more competitive. Brokerage and research firm Edelweiss Securities said that the Rs 20/share dividend payout from Coal India looks highly unlikely as the firm stares at a huge cash outgo under the ‘Vivaad se Vishwas scheme. Edelweiss expecs a dividend of Rs 12 per share.

“Large proportion of COAL’s costs is fixed in nature with employee costs accounting for ~50% of the company’s expenses. Further, with the company focusing on OBR removal activities, COAL would continue using contractual employees, in our view,” said Brokerage firm Motilal Oswal in a report. Motilal Oswal has a buy rating on the stock with a target price of Rs 195. A fall in international coal prices could pose a major risk for the company, according to ICICI Securities while cutting its target price to Rs 264 per share from the earlier Rs 284. The brokerage has trimmed profit estimates for the fisal by 16%.

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Financials, bank stocks lead Nifty Bank gaining 3%; check what’s contributing to Sensex’s up move today

Extending gains from the previous session, BSE Sensex and Nifty 50 were trading nearly one per cent higher on Thursday mirroring the gains in Asian markets ahead of the expiry of futures and options contracts of May series. Sensex touched day’s high of 31,986, while the broader Nifty 50 index surpassed the 9,400-mark. Private bank stocks were the leading the rally today with index heavyweights such HDFC Bank, ICICI Bank, Kotak Mahindra and Axis Bank among the top index contributors. Among the top gainers were IndusInd Bank, Axis Bank, HDFC Bank. Larsen & Toubro (LT) and Kotak Mahindra Bank. The losers were led Infosys, ITC, TCS, HCL Tech and Tech Mahindra. The broader market, mid-caps and small-caps, were also trading higher, as their sectoral indices on BSE gained 0.94 per cent and 1.20 per cent, respectively.

“The markets opened above the crucial 9350 level and we need to hope it stays above those levels for a couple of trading sessions. If we are successful in doing that, the Nifty50 should attempt 9700 levels in the June series itself. The support range of the market has now been upgraded to 9000 – 9050 levels,” said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.

Nifty Bank index top sectoral gainer: Nifty Bank index surged nearly 3 per cent in trade led by gains in IndusInd Bank, Axis Bank, Bandhan Bank and RBL Bank. On the contrary, Nifty IT index was down over one per cent weighed down by Wipro, Infosys, HCL Tech and TCS.

Corporate earnings: Federal Bank, CEAT, Heidelbergcement India, Lupin, TVS Motors, IIFL Finance, Muthoot Capital Services, Radico Khaitan, Rain Industries, Tata Steel Long Products and Wendt (India) are among 24 companies are scheduled to announce their March quarter earnings.

Uflex shares jump 17%: Uflex share price surged 16.76 per cent to Rs 202.65 apiece on BSE in Thursday’s after the company in a press release said that it has developed a Personal Protective Equipment (PPE) Coverall ‘Flex Protect’ in joint collaboration with lIT-Delhi and INMAS, DRDO, Delhi.

Global markets: In overnight trade on Wall Street, US stock market indices rose as the further easing of lockdowns lifted optimism for an economic recovery. The Dow Jones rose 2.2 per cent, the S&P 500 gained 1.48 per cent, and the Nasdaq Composite added 0.77 per cent.

FII and DII data: Foreign institutional investors (FIIs) sold shares worth Rs 334.74 crore, while domestic institutional investors (DIIs) bought shares worth Rs 2,408.85 crore on a net basis on Wednesday, according to the provisional data available on the NSE.

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