The shares of Equitas Small Finance Bank opened 5 percent higher at Rs 62 as against its previous close of Rs 59.35. It further zoomed by 2 percent to scale up to a new 52-week high of Rs 63.90. The shares zoomed after the SBI Funds management got approval from the Reserve Bank of India to acquire a stake in the bank.
As per the BSE filing, the RBI has allowed SBI Funds Management to acquire shares up to 9.99% of the paid-up equity capital of the bank. The fund management is set to acquire a stake in the bank through multiple schemes.
Equitas Small Finance Bank is among the largest small finance banks in India which has a diversified loan portfolio and less dependence on microfinance business.
The promoter of the bank, Equitas Holdings Limited has a 74.5 percent stake in the company. In addition to that, various mutual funds schemes and insurances hold a total of 15.35 percent stake in the bank.
Last year, the bank announced a reverse merger with its parent company Equitas Holdings. The revised swap was finalized with a ratio of 100:231. This means that the shareholders of Equitas Holdings will get 231 shares of the bank for every 100 they hold.
Despite this, the shares of the bank have gained approximately 7 percent in the last five days, and in the span of six months, the stock has gained approximately 54 percent.
Kotak Institutional Equities is bullish on the stock and has maintained a ‘Buy’ rating with a target price of Rs 65 per share which represents an upside of 8 percent from the current levels.
Management reiterated that the asset quality is improving and that is driving confidence to grow faster, while liabilities continue to be an area of work. We take comfort from the stabilization in leadership at the bank and the progress on the reverse merger. We see an opportunity for stock performance led by the merger,” siad the brokerage in its note.
Written by Anoushka Roy
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