Comments
The shares of State-run Canara Bank were trading over 2 per cent lower on Wednesday.
The stock came into focus after it was known that billionaire investor Rakesh Jhunjhunwala has bought 1.59 per cent stake, according to an updated shareholding statement released by the state-run lender.
The stock ended at ₹151.05 on the BSE, down ₹4.65 or 2.99 per cent. It opened at ₹156.40 as against the previous close of ₹155.70. It hit an intraday high of ₹156.70 and a low of ₹150.60.
On the NSE, the stock ended at ₹151.10, down ₹4.60 or 2.95 per cent.
Institutional buyers
The bank on Tuesday said that it has approved allotment of over 16.73 crore shares in the ₹2,500 crore qualified institutions placement (QIP) that closed a day earlier.
The QIP opened on August 17 and closed on August 23, 2021.
The sub-committee of the board, capital planning process of the Board of Directors of the bank, at its meeting held on August 24, 2021, approved the allotment of 16,73,92,032 equity shares to eligible qualified institutional buyers at an issue price of ₹149.35 per equity share, aggregating up to ₹2,500 crore, Canara Bank said in a regulatory filing.
With this, the paid-up equity share capital of the bank stands increased to ₹1,814.13 crore from ₹1,646.74 crore, it said.
A total of seven investors have been allotted more than 5 per cent of the equity offered in the QIP issue, said the Bengaluru-based lender.
LIC subscribed to 15.91 per cent; BNP Paribas Arbitrage 12.55 per cent; Societe Generale 7.97 per cent; Indian Bank and ICICI Prudential Life Insurance - 6.37 per cent each.
Morgan Stanley Asia (Singapore) Pte-ODI bought 6.16 per cent of the shares issued in QIP and Volrado Venture Partners Fund II 6.05 per cent.
Analysts bullish
Analysts are positive about the QIP bringing up the bank's capital ratios.
Emkay Global Securities maintained a 'Buy' rating on the stock with a target price of ₹185.
"We believe that the capital raise will mainly shore up its capital ratios, which remain sub-par compared to peers after the merger with Syndicate Bank," Emkay said in its report.
"We believe that merger-related concerns are largely behind and the bank should report a gradual improvement in its RoA/RoE to 0.4-0.5%/10-11% by FY23E-24E, led by better growth and moderate LLP. Retain Buy with a TP of ₹185, valuing the core bank at 0.6x Sep'23E ABV and subs at ₹22 per share," it added
According to Emkay, the key risks to its call/estimates include higher-than-expected NPA formation in retail/SME, a slower growth trajectory and a sharp rise in G-Sec yields leading to lower treasury gains
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.