This Smallcap stock is engaged in the business of lending and extends its reach to agriculture including Kisan credit card loans, housing loans, mortgage loans, and MSME loans to individuals was up 4 percent after RBI approved HDFC Bank to acquire a 9.50% stake.
Price Action
With a market capitalization of Rs. 1,336.14 Crores, the shares of Capital Small Finance Bank Limited touched a day’s high of Rs. 299 per equity share, up 4.14 percent. The stock reiterated from the day’s high and was trading at Rs. 295.30 which is 2.86 percent higher than its previous day’s close price of Rs. 287.10. The stock delivered a negative return of 16.92 percent and underperformed the Nifty Index in the six months.
What Happened
The company’s stock surged after the bank released a report on receiving approval from the Reserve Bank of India for HDFC Bank Limited to acquire a 9.50 percent stake in Capital Small Finance. HDFC Bank has received approval including its subsidiaries HDFC Mutual Fund, HDFC Life Insurance Company Limited, HDFC Pension Management Company Limited. HDFC ERGO General Insurance Company Limited and HDFC Securities Ltd. This approval is valid for a one-year period from the date of said letter and shall automatically lapse if the acquisition is not completed within the specific time frame.
About the Company
Capital Small Finance Bank was established in 1999 and rebranded in 2016. It is India’s first small finance bank headquartered in Jalandhar, Punjab. They primarily serve the middle and upper-middle-income segments while focusing on semi-urban and rural areas.
The bank operates a branch-based model with 172 branches and 174 ATMs, offering a diverse range of financial products including loans for agriculture, MSMEs, housing, and deposits. Their business model focuses on customer engagement, secured lending, and leveraging technology to improve operational efficiency while maintaining strong asset quality and compliance with regulatory standards.
Financials & Ratios
Its Net Interest Income improved by 20.23 percent year on year from Rs. 84 Crores in Q2FY24 to Rs. 101 Crores in Q2FY25, accompanied by a profit of Rs. 24 Crores to a profit of Rs. 33 Crores.
In terms of Return ratios, the return on equity (RoE) stood at 12.34 percent, and a return on assets (RoA) of 1.27 percent in FY24. They have a CASA ratio of 38.3 and a Loan to deposit ratio of 0.82 as of FY24.
Shareholding Pattern
As of September 2024, the promoters of Capital Small Finance Bank held a share of 18.84 percent, Foreign Institutional Investors (FII) held around 1.33 percent, Domestic Institutional Investors (DII) held around 31.73 percent and the remaining 48.10 percent was held by Public Investors.
Written by Santhosh S
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