The shares of State-run Canara Bank were trading over 2 per cent lower on Wednesday.
The stock came into focus after it had been known that billionaire investor Rakesh Jhunjhunwala has bought 1.59 per cent stake, consistent with 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 coffee 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’s approved allotment of over 16.73 crore shares within the ₹2,500 crore qualified institutions placement (QIP) that closed each 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 persisted August 24, 2021, approved the allotment of 16,73,92,032 equity shares to eligible qualified institutional buyers at a problem price of ₹149.35 per equity share, aggregating up to ₹2,500 crore, Canara Bank said during 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 are allotted quite 5 per cent of the equity offered within the QIP issue, said the Bengaluru-based lender.
LIC subscribed to fifteen .91 per cent; BNP Paribas Arbitrage 12.55 per cent; Societe Generale 7.97 per cent; Indian Bank and ICICI Prudential life assurance – 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 mentioning 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 prop 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 therefore 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 pointy rise in G-Sec yields resulting in lower treasury gains
