Stocks

Equitas SFB stock tumbles nearly 11% on MD & CEO’s exit announcement

BL Chennai Bureau | Updated on: May 20, 2022
PN Vasudevan, MD and CEO, Equitas Small Finance Bank

PN Vasudevan, MD and CEO, Equitas Small Finance Bank | Photo Credit: Bijoy Ghosh

The market seem to be unconvinced as the announcement came without a proper transition plan and is in the middle of the merger process with Equitas Holding

The stock price of Equitas Small Finance Bank tanked nearly 11 per cent to ₹52.95 apiece on the National Stock Exchange (NSE) after its founder PN Vasudevan’s announcement of stepping down to pursue ‘his distinct set of goals in life’.

Equitas Bank opened at ₹55.5 on the NSE. It touched an intraday high of ₹58.05 before tumbling to a low of ₹51.55 and closed at ₹52.95. 

The fall in Equitas Bank stock comes even as the key Indian benchmark indices Nifty50 and BSE Sensex soared nearly 3 per cent on Friday.

In a regulatory filing, Vasudevan, on Thursday, announced his decision to step down from his role to focus on the public charitable trust that he and his wife had set up. The bank said its Board would be forming a search committee soon to identify the successor and that Vasudevan would continue as MD & CEO till the succession and transition process are completed. 

However, the market seem to be unconvinced as the announcement came without a proper transition plan and is in the middle of the merger process with iEquitas Holding Ltd.

“In our view, Vasudevan’s resignation could have been handled well with proper succession planning in place and keeping all the stakeholders well-informed. His sudden resignation at this crucial juncture, when the bank is just recovering from the Covid shock and also in the midst of a reverse merger with the holdco, will be a near-term drag on the stock,” Emkay Global Financial Services said in a report. 

Although the brokerage retained its ‘Buy’ rating for both Equitas SFB and Equitas Holdings, it has reduced its target price for both the stocks. For Equitas SFB, it has cut the target price to ₹67 from ₹75, factoring in a 10 per cent discount relating to management succession/transitional risk. For Equitas Holdings, it slashed the target price to ₹146 from ₹164.

The stocks of Equitas Holdings tumbled over 7 per cent to ₹108.10 apiece on NSE on Friday. 

Published on May 20, 2022
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