One of the highly anticipated stock split record dates is finally announced. PSU lender, Canara Bank is set to split for the first ever in the ratio of 1:5. The bank has now fixed Wednesday, May 15, 2024, as the record date to determine eligible shareholders for the sub-division.
Canara Bank Stock Split:
In its regulatory filing on Friday, Canara Bank said, "the Bank has fixed Wednesday, 15th May 2024 as the "Record Date" for determining entitlement of Equity Shareholders for sub division/ split of existing Equity Shares of the Bank, such that 1 (one) equity share having face value of Rs. 10/- (Rupees Ten only) each, fully paid up, will be sub-divided into 5 (Five) equity shares having face value of Rs. 2/- (Rupees Two only) each, fully paid up, ranking pari-passu in all respects."
Hence, the stock split ratio is 1:5. In terms of stock split, the share capital remains the same, however, a number of equities rise and the price becomes affordable for both new and existing customers.
For Example: Canara Bank's current market price is at Rs 578.70 apiece. Taking this as an example and applying 1:5 stock splits ratio, then this share price will split into 5 small shares. After the stock split, the CMP will be Rs 115.74 for 1 share.
Stock splits mean the sub-division of already owned shares into smaller shares. It is done to improve liquidity by breaking it into smaller sizes. The face value also reduces in the proportion of split ratio but has no impact on share capital and reserves.
To benefit from this stock split, investors will need to hold shares of Canara Bank by the end of the record date.
Canara Bank Share Price:
On April 19, Canara Bank's share price ended at Rs 578.70 apiece, down by 0.83% on BSE with a market cap of Rs 1,04,983.72 crore.
However, in the trading week from April 12th to 19th, Canara Bank shares have fallen by 6%. But its monthly performance is in green with gains of 5%. YTD, Canara Bank shares are up by 31% on BSE so far.
Meanwhile, in six months, the stock has gained by 57%, and in a year, it is up by a whopping 95%.
Canara Bank Share Price Target:
Motilal Oswal has recommended BUY on Canara Bank for a target price of Rs 650. This implies over 12% potential upside in the PSU bank.
While earlier, Way2Wealth brokerage also recommended BUY on Canara Bank for a target price of Rs 680. According to its research note, "Multiple levers are in place for the bank to positively impact its price performance. Thus, we remain positive on the stock and arrive at a target price of 670, implying 0.96x FY26e P/BV. Hence we recommend buying at the current valuation."
Some of the key highlights by Way2Wealth on Canara Bank are:
- It is the fifth-largest bank in the Indian banking industry based on loan book size and third third-largest in PSU basket. Under the PSU bank consolidation scheme, CANBK combined with Syndicate Bank.
- Gross advances grew 10% YoY CAGR throughout FY20-23 to ₹8,628bn, with a share of RAM segment rising from 52% in FY20 to 55% in FY23.
- Driven by strong credit demand in India, it is likely to see healthy loan book growth momentum to continue with agriculture and retail segment especially housing finance and vehicle loans to drive this growth.
- Healthy recoveries and falling fresh slippages may drive further fall in NPA levels going forward.
In Q3FY24, net profit came in at Rs 3,656 crore, versus Rs 2882 crore in the same quarter a year ago. Global Business stood at Rs 22,13,360 Cr, which grew by 9.87%. While Net Interest Income stood at Rs 9,417 crore, grew by 9.50%. Notably, the Net Interest Margin stood at 3.02% improved by 9 bps. Gross NPA Ratio stood at 4.39%, down by 150 bps as of December 31, 2023.
Founded in July 1906, Canara Bank has been scaling up its market position to emerge as a major Financial Conglomerate with as many as thirteen subsidiaries/sponsored institutions in India and abroad. As of December 31, 2023, the Bank has 9585 Number of Branches, out of which 3095 are Rural,2742 Semi Urban,1906 Urban & 1842 Metro along with 10463 ATMs. Bank is also having 3 Overseas Branches in London, New York & Dubai.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
Click it and Unblock the Notifications
Sign in with Google