SBI Mutual Fund received approval from the Reserve Bank of India to acquire a stake in one of the leading private sector banks.
Karur Vysya Bank closed around 1 percent up to Rs 154.40 from its previous close of Rs 153.30. It is a small-cap bank with a market capitalization of Rs 12,400 crores.
According to Karur Vysya Bank’s filing, the Reserve Bank of India (RBI) has approved the SBI Mutual Fund (SBI MF) to acquire up to 9.99% of The Karur Vysya Bank Ltd’s paid-up share capital or voting rights. The approval was granted in response to an application made by SBI MF to RBI.
If SBI Mutual Fund fails to acquire the major shareholding within one year from the date of RBI’s letter, the approval will be canceled. SBI Mutual Fund must also ensure that its aggregate holding in the bank does not exceed 9.99% of the paid-up share capital or voting rights of the bank at any time.
Furthermore, if the aggregate holding falls below 5 percent, SBI Mutual Fund will need to obtain prior approval from RBI to increase it to 5 percent or more of the full value of the bank’s shares or voting rights.
The RBI’s approval is a significant development for SBI Mutual Fund, as it will allow the company to increase its investment in Karur Vysya Bank. This could result in greater synergies between the two companies and an improvement in their respective market positions.
According to the Karur Vysya Bank Q2 report, the net revenue increased by 28 percent year over year, from Rs 1,821 crore in Q2FY23 to Rs 2,335 crore in Q2FY24. In addition, the company’s net profit rose around 51 percent year over year, from Rs 250 crores in Q2FY23 to Rs 378 crores in Q2FY24.
The Promoters of the company own 2.2 percent of the company; the General Public owns 47.4 percent, Foreign Institutional Investors own 18.2 percent, and Domestic Institutional Investors own 32.2 percent.
In addition, the Bank has a CASA ratio of 33.21. It has a low price-to-earnings ratio of 7.5 compared to its peers and a net profit margin of 17 percent.
The share price of Karur Vysya Bank has increased by 43 percent in the last six months and 54 percent in the last year.
Karur Vysya Bank offers a wide range of banking and financial services, including commercial banking and treasury operations.
Written by Sriram KV
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