CSB Bank had made a strong debut at the bourses at Rs 300, a 54 per cent premium to its issue price. The stock has since erased all its listing gains, and tanked 38 per cent from its life-time high of Rs 314, touched on the second day of its listing.
According to the bank's shareholding pattern as on December 31, 2019, foreign portfolio investors (FPIs), alternative investment funds, financial institutions/banks and insurance companies have reduced their stake in the bank post its listing. The combined stake of these entities has declined to 5.62 per cent from 8.1 per cent as on December 2, 2019.
However, domestic mutual funds' holding in the bank increased to 6.42 per cent from 2.38 per cent. SBI Magnum Global Fund raised its stake to 4.79 per cent from less than 1 per cent at the time of listing, data shows.
The bank’s initial public offer (IPO) is mainly due to the Reserve Bank of India’s (RBI’s) regulatory requirement, as per which Fairfax India Holdings Corporation (FIHC) is required to reduce stake to 40 per cent in five years, 30 per cent in 10 years, and 15 per cent in 15 years.
“The last few years have been transformational for the bank with declining influence of trade union, sharp improvement in capital position and strengthening balance sheet and profitability. However, amidst a weak operating environment, the next phase could be more challenging,” analysts at Reliance Securities said in an IPO note.
“CSB’s significant loan portfolio (31 per cent of advances) consists of advances that are secured by gold ornaments. A sudden decline in the market price of gold may adversely affect CSB's financial condition, cash flows and earnings. Further, it may be unable to realise the full value of its pledged gold, which exposes the bank to a potential loss,” analysts at ICICI Securities said in their IPO review.
At 12:48 pm, CSB Bank was trading 1.6 per cent lower at Rs 194.85 on the BSE, as compared to 0.03 per cent rise in the benchmark S&P BSE Sensex. A combined 357,810 equity shares have changed hands on the NSE and BSE so far.