Rakesh Jhunjhunwala picks up stake in Canara Bank; stock may rally 19% from current levels

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Rakesh Jhunjhunwala portfolioRakesh Jhunjhuwala has added PSU lender Canara Bank stock to his portfolio.

Rakesh Jhunjhuwala has added PSU lender Canara Bank stock to his portfolio, according to the latest shareholding pattern of the bank available with the stock exchanges. With the addition of Canara Bank to his portfolio, Rakesh Jhunjhunwala now owns shares of at least three bank stocks, including Federal Bank and Karur Vysya Bank. The billionaire investor is known for picking value stocks and holding them for years at a stretch while they turn multi-baggers.

According to the regulatory filing of Canara Bank, Rakesh Jhunjhunwala now owns 1.59% of Canara Bank or 2,88,50,000 equity shares of face value Rs 10 each. Earlier Canara Bank had announced the completion of a Qualified Institutional Placement (QIP), where the bank approved the allotment of 16,73,92,032 equity shares to eligible qualified institutional buyers at an issue price of Rs 149.35 per equity share, aggregating up to Rs 2,500 crore. The QIP opened on August 17 and closed on August 24. Currently, shares of Canara Bank trade at Rs 155.7 per share after gaining nearly 2% yesterday. 

Marquee investors such as LIC India, BNP Paribas Arbitrage, Morgan Stanley Asia, and Societe Generale have picked up a stake in Canara Bank through the IPO. LIC has bought 2.66 crore shares or 15.91% of the total issue size. BNP Paribas has picked up 2.1 crore shares. 

Rakesh Jhunjhunwala’s latest bet comes after the big bull has reiterated his bullish bias towards the banking sector and select PSU lenders. Earlier in June, the billionaire investor had said in an interview that he was bullish on banks. “When there is demand for money, banks will get bargaining power and then lenders that can garner deposits will get that power so I’m bullish on the banking sector as a whole and especially on the old public sector banks because they have the cheapest valuations and are going to see the biggest upside in earnings,” he had said.

Canara Bank Stock Call: Up to 19% upside

Analysts believe that Canara bank will benefit from the QIP, which will help the lender shore up capital levels. “The CET-1 ratio still remains relatively lower vs. the large peers (9.8% – 11.6%). Thus, we believe that CBK needs to further raise capital either from the market or via a stake sale in subsidiaries,” domestic brokerage and research firm Emkay Global said in a note. Emkay Global has a ‘Buy’ rating on the stock with a target price of Rs 185, implying an 18.8% upside.

(The stock recommendations in this story are by the respective research and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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