Jhunjhunwala sells 45 lakh shares in this multibagger PSU bank; what's next?

Celebrity Dalal Street investor Rekha Rakesh Jhunjhunwala has partially offloaded her stake in a multibagger PSU lender during the September 2024 quarter. According to the latest shareholding pattern, Jhunjhunwala has dumped 45.20 lakh crore shares of Canara Bank between July-September 2024 period.

As of the latest regulatory filing, Rekha Rakesh Jhunjhunwala owned 12,86,93,000 equity shares, or 1.42 per cent stake, in the state-run lender as of September 30, 2024. However, she held 13,32,13,000 equity shares, or 1.47 per cent stake in the PSB at the end of June 30, 2024.

On the other hand, mutual funds upped stake in Canara Bank by 85 basis points to 4.34 per cent. Retail investors also increased stake by 0.53 percentage points to 8.16 per cent. FPIs reduced stake in the PSB by 65 basis points to 11.24 per cent. To recall, shares of Canara Bank traded ex-split in 1:5 ratio in May 2024.

Shares of Canara Bank Ltd rose 1.33 per cent to Rs 106.30 on Wednesday, against its close at Rs 104.90 on Tuesday. The lender's total market capitalization was slightly above Rs 96,000 crore during the session. The stock has corrected nearly 18 per cent since June 30, 2024.

Shares of Canara Bank have gained nearly 45 per cent in the last one year, while it has gained 20 per cent in 2024 so far. The stock has remained flat in the last one month period. However, the stock has tumbled nearly 19 per cent from its 52-week high at Rs 129.35 hit on June 4, 2024.

According to the data from Trendlyne, late Rakesh Jhunjhunwala's wife Rekha Jhunjhunwala publicly holds 24 stocks with a net worth of over Rs. 37,624 crore as per the latest corporate shareholdings filed so far.

Kotak Institutional Equities expects Canara bank to report 10 per cent YoY earnings growth in spite of YoY decline in PPOP as provisions are expected to be lower YoY. "NIM is expected to see a modest sequential decline driven by a marginal increase in cost of deposits. We expect slightly elevated slippages," it said.

However, it do not expect much impact on credit cost because the bank had already made provisions proactively during 1QFY25. However, net NPL ratio is still higher than other PSU banks under our coverage, which means that credit cost is unlikely to decline meaningfully, added Kotak with a target price with a reduce rating a target price of Rs 106.

On the other hand, Motilal Oswal Financial Services expects margins to see slight compression, while advances and deposit growth to be the key monitorables. The brokerage anticipates asset quality to improve, it added with a target price of Rs 133 and a 'buy' rating on the stock.

Antique Stock Broking also same rating on the counter with a target price of Rs 130, while Emkay Global Finance Services has 'buy' rating on the stock with a target price of Rs 130. "Credit growth is anticipated to remain slow, which will also affect margins and profitability. The bank has significant exposure to RINL, it may not classify it as an NPA yet," said Emkay Global.