Young Kotaks inch closer to market cap of elderly SBI

Even as investors across the country on Thursday spent anxious moments during the first couple of hours as the stock markets were in sessions, things turned worse for them when State Bank of India, the largest PSU bank in the country declared its quarterly results noting a over 60 per cent dip in its profits. Subsequent to the announcements made by the Bank's chairperson, Arundhati Bhattacharya in front of media in the country's commercial capital, markets witnessed a free fall bringing down Nifty below 7000 mark and Sensex fell by 807 points stopping at a below 23000 mark.

During all these actions we all missed a very significant development--market cap of 61 year old State Bank of India has now come neck to neck with the market cap of just 13 plus years old Kotak Mahindra Bank (KMB). A stunning fact emerged perplexing the investors in the markets, already depressed with the mayhem. In a desperate attempt to save the image of her bank, Bhattacharya told mediapersons about 'other good numbers' of SBI emerging out of the quarterly review of the financials. Already in panic, investors missed the vital point that the chairperson had raised and huge volume of sell-off was witnessed. 

India’s public sector banks (PSB) are loaded with huge non-performing assets (NPAs), which in turn have impacted their profitability, for December 2015 quarter. PSB have been seeing panic selling due to credit quality concerns which is seen from the fall of share price of all PSB.

As of February 11, the market cap of SBI stood at Rs 1.17 lakh crore. Now, compare this with Rs 1.15 lakh crore market cap of just one private sector player, Kotak Mahindra Bank. In a close competition, ICICI Bank apparently also losing the battle against KMB, promoted by the Rajkot-based entrepreneur, Uday Kotak. It will from here, be interesting to watch out how SBI handles the situation which not only does concern its investors but even simple customers in millions associated with the PSU bank major.

A confident Bhattacharya armed with her senior colleagues handled the media well on Thursday but how the bank is going treat its lakhs of stock-holders subsequent to this huge dip in profits, something needs to be observed in coming few weeks.