Kotak Bank Faces 6th C-Suite Exit in Just Over a Year; Should Investors be Concerned?

Kotak Bank Shares: For Kotak Mahindra Bank, 2025 is surely not off to a good start as the company witnessed yet another departure from its C-suit, and that too from the operations and technology segment, which made headlines last year. The exit of Milind Nagnur, COO and CTO at Kotak Mahindra Bank, marks the sixth major departure in just over a year or 15 months, to be more precise.

At 11:15 am, the shares of the company declined by nearly 3 per cent on the National Stock Exchange.

While the company's shares have remained under pressure in 2024, D-street's hopes for a stronger 2025 for Kotak might start rerouting now.

Last year did not bid well for the banking firm, not in terms of its financial performance, but rather the regulatory pressure that eventually weighed heavily on investor sentiment. The Reserve Bank of India (RBI) barred Kotak Mahindra Bank from onboarding new customers via online channels as the central bank noticed major lags in the company's IT operations.

Following this, the bank also saw the exit of its joint MD, KVS Manian, and Virat Diwanji, Group President of the Consumer Bank.

Previously, Dipak Gupta (Joint MD) and Jaimin Bhatt (Group CFO) also announced their departure from the bank. In 2023, Uday Kotak's tenure as CEO came to an end but that was owing to regulatory requirements.

"Nagnur’s resignation adds to the significant churn in top management over the past 15 months. However, it is also important to note here that most of the recent attrition is driven by superannuations," Nomura stated in its report.

Superannuation is more like a retirement benefit offered to an employee by the employer.

Should Investors be worried?

While the shares of Kotak Mahindra Bank have largely remained in the range-bound zone, its financial performance has remained relatively resilient despite regulatory pressure.

In Q2FY25, the banking firm reported a 5 per cent year-on-year surge in its standalone net profit at Rs 3,344 crore. Although, the growth figure remained muted, it's important to note that Q2 was largely a tough quarter for Indian Inc.

Nomura has maintained a Buy rating on the stock with a projection of a 16 per cent loan CAGR and 15 per cent deposit CAGR.

"We continue to monitor the changes in top management, especially in light of the recent churn. Any impact of the recent management exit on Kotak Bank’s ban resolution timelines or on medium term growth outlook will be key to watch," the global brokerage firm said.

However, few risky aspects continue to loom. Be it the delay in resolving RBI's restriction on digital onboarding and credit card issuance, churn in top level management or decline in NIMs.