This Rekha Jhunjhunwala-owned share nears Rs 1 trn mcap; plans stock split

Shares of Canara Bank hit multi-year high at Rs 550.50, as they rallied 6 per cent after the lender said its board will meet on February 26 to consider stock split.

Shares of Canara Bank hit a multi-year high of Rs 550.50, as they rallied 6 per cent on the BSE in Wednesday’s intra-day trade after the lender announced its board will meet on February 26, 2024 to consider and approve sub-division/split of the equity shares of the Bank. Currently, the face value of Canara Bank stands at Rs 10 per share.

Rekha Jhunjhunwala, wife of ace investor Rakesh Jhujhunwala, owns 37.6 million equity shares or 2.07 per cent stake in Canara Bank. Currently, her stake is valued over Rs 2,000 crore.          

Companies split their shares in lower denomination to encourage wider participation of small investors; and to enhance liquidity of the equity shares of the company in the stock market.

The market price of Canara Bank has more-than-doubled or zoomed 105 per cent from its 52-week low of Rs 268.85 touched on February 24 last year. The stock is trading at its highest level since May 2011. It had hit a record high of Rs 821.12 on November 9, 2010.

A sharp rally in stock price has helped Canara Bank come close to joining the elite group of bank’s having market capitalisation of Rs 1 trillion. At 10:28 am; Canara Bank's market capitalisation stood at Rs 99,559 crore, the BSE data shows.

As on December 2023, the promoter, the government of India, held 62.93 per cent stake in Canara Bank. Foreign portfolio investors held 11.21 per cent holding, followed by retail individual investors (10.17 per cent), insurance companies (7.62 per cent) and mutual funds (5.21 per cent), the shareholding pattern data shows.

Canara Bank is one of India's larger public sector banks (PSBs), with gross advances and deposits of Rs 9.5 trillion and Rs 12.63 trillion, respectively, as on December 31, 2023. The merger of Syndicate Bank has also strengthened the market position of Canara Bank.

The rating agency ICRA  expects  the Canara Bank  to  remain  self-sufficient  for  its  capital  requirements  for  absorbing  incremental  stress  as  well  as  for growth  requirements  while  keeping  the  desired  cushion  on  the  capital  well  above  the  regulatory  levels  (including  capital conservation  buffers,  CCB),  driving  the  Stable  outlook  on  the  ratings.

Going forward, ICRA expects the bank to maintain its profitability levels, supported by the high provision cover on legacy stressed assets, leading to lower credit costs compared to the past.

Canara Bank on Saturday, February 3, informed that ICRA has re-validated the rating [ICRA] AA+ (Stable)] for Rs. 5,000 crore Basel III Tier I Bond Programme of the Bank.

Healthy net interest income (NII) growth coupled with a largely stable cost to income ratio and moderation in credit costs has helped the bank to sustain RoAs above 1 per cent over the past couple of quarters. Analysts at JM Financial Institutional Securities expect Canara Bank's rerating to continue going forward, driven by steady NIMs and continued expansion in return profile with RoA/RoE at 1.03 per cent/18.7 per cent by FY26E, and stable asset quality with moderate credit costs.