Canara Bank has received the Reserve Bank of India (RBI) nod for divesting its shareholding in Canara Robeco Asset Management Company Ltd and Canara HSBC Life Insurance Company Ltd via initial public offers (IPOs), thus unlocking value for Canara Bank shareholders.
Canara Bank intends to cut stakes in Canara Robeco Asset Management Company Ltd by 13 per cent and Canara HSBC Life Insurance Company Ltd by 14.5 per cent.
"Further, RBI has intimated that in accordance with the exemption granted by the government of India, the bank should adhere to the October 31, 2029 timeline for bringing its stake in these entities up to 30 per cent," Canara Bank informed BSE and NSE.
Subsequent to this, the PSU bank will initiate the process of IPO and shall keep stock exchanges informed about the material developments in this regard duly complying with SEBI LODR regulations.
Canara Bank shares are down 8.4 per cent in the past six months compared with 22 per cent in 2024 so far.
The PSU bank recently reported an earnings beat in Q2 led by controlled opex, though its net interest margin (NIM) moderated 4 basis points sequentially. Canara Bank's loan growth in Q2 was led by the retail segment, especially the gold loan book, while deposit growth was modest.
The CASA ratio witnessed sequential improvement. There has been an improvement in overall asset quality ratios, with slippages also seeing an improvement, MOFSL noted. The Canara Bank management expects credit costs to be less than 1 epr cent for FY25.
"However, SMA book increased due to one central government account (metal sector) and another state government guaranteed account. We broadly retain our numbers and estimate CBK to deliver FY26E RoA/RoE of 1.08 per cent/18.9 per cent. Reiterate BUY with a target price of Rs 125 (premised on 1.1x FY26E ABV)," MOFSL said in a October 30 note.