Rakesh Jhunjhunwala Portfolio: 1st-Ever 1:5 Stock Split Declared; Bet On The PSU Stock?

During Tuesday's closing session, Canara Bank, a large-cap public sector bank, had a market cap of Rs 1,03,786.39 Cr. In all Indian states and Union Territories, Canara Bank serves more than 11.30 crore customers as of December 2023 through a network of 9,585 branches and 12,120 ATMs/recyclers. In an effort to increase the bank's share liquidity, lower the price for retail investors, and increase the number of retail investors, the bank announced the first-ever stock split in a 1:5 ratio.

Canara Bank Stock Split

"This is to inform the Stock Exchanges that the Board of Directors of the Bank at it's meeting held today, i.e Monday, 26th February 2024, inter alia, approved Sub-division/ split of every one equity share of face value of Rs. 10/- (Rupees ten only) each, fully paid-up, into 5 (five) equity shares of face value of Rs. 2 /- (Rupee two only) each, fully paid-up, subject to approval of the Reserve Bank of India," said Canara Bank in a stock exchange filing.

"Further, with reference to Our letter Ref No. SD:631/632/11/12::2023-24 dated 07.02.2024, the "Trading Window" for the Directors / Designated Persons of the Bank / their relatives / Connected Persons to deal in shares / securities of the Bank shall reopen on 29.02.2024," the bank further informed to the stock exchanges.

Canara Bank said, 2 to 3 months from intimation of date of Board Meeting ( i.e 07-02-2024) to Stock Exchanges, considering the time taken for receiving RBI's approval is the expected time of completion of the stock split.
Informing the rationale behind the stock split, Canara Bank said the sub-division of equity shares has been declared "In order to improve the liquidity of the Bank's share and to make it affordable for retail investors and also to broaden the retail investors base."

Canara Bank Financials

In comparison to December 2022, when the bank's net profit was Rs 2882 cr, its net profit for December 2023 was Rs 3,656 cr. Net interest income climbed by 9.50% to Rs 9,417 Cr, while net interest margin increased by 9 basis points to 3.02%. As of December 2023, the bank's Gross Non-Performing Assets (GNPA) ratio was 4.39%, compared to 5.89% in December 2022 and 4.76% in September 2023.

As of December 2023, Canara Bank's Net Non-Performing Assets (NNPA) ratio was 1.32% as against 1.41% in September 2023 and 1.96% in December 2022. Between Q3FY23 and Q3FY24, the Provision Coverage Ratio (PCR) jumped from 86.32% to 89.01%.

The bank said that, compared to Q3 FY23, its Return on Equity was 18.38%, but for Q3 FY24 it was 21.95%, and its Return on Assets was 1.01%, up from 0.76% in Q3FY23.

Canara Bank Share Price Target

Canara Bank is overbought & bearish on the Daily charts with strong resistance at 599. A daily close below support of 563 could lead to a target of 522 in the near term, said AR Ramachandran from Tips2trades.

Jhunjhunwala Stake In Canara Bank

In the quarter ending in December 2023, Rekha Rakesh Jhunjhunwala, the late investor Rakesh Jhunjhunwala's wife, carried 3,75,97,600 shares of the bank in her portfolio, or 2.07% stake in Canara Bank.

Disclaimer

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