It is a busy week for IPOs and a lucrative one for PSU banking major Canara Bank, which is offloading stakes in two public offers this week — Canara Robeco AMC and Canara HSBC Life Insurance Company.
Canara Robeco IPO kicked off today, October 9, while the Canara HSBC Life Insurance IPO will kick off tomorrow, promising up to 13,000% windfall for the PSU bank stock.
How much will Canara Bank make from Canara Robeco IPO?
Canara Robeco IPO price band had been fixed in the range of ₹253 and ₹266 per share. The issue is entirely an offer for sale (OFS) by the promoters, Canara Bank and ORIX Corporation Europe N.V.
Since Canara Bank is offloading a stake worth nearly ₹690 crore in the Canara Robeco IPO, it is set to make a sweet return of over 13,000% on this investment.
According to the Canara Robeco AMC’s red herring prospectus, Canara Bank is offloading 2.59 crore shares in the IPO. The weighted average cost of acquisition by Canara Bank for these shares stood at ₹2.01 apiece. Given the upper end of the IPO price band of ₹266, Canara Bank’s return on investment stands at 13,134%.
Canara Bank currently holds a 51% stake in the company, which will fall to 38% post the Canara Robeco IPO’s listing.
Brokerage Anand Rathi shared a positive view on Canara Robeco IPO. “At the upper price band, the company is valued at P/E of 27.8x to its FY25 earnings and market cap of ₹ 53,045 million post issue of equity shares. We believe that the IPO is fully priced and recommend a “Subscribe-Long Term” rating to the IPO,” it said.
Meanwhile, Arun Kejriwal, Founder of Kejriwal Research and Investment Services, said, “Valuations of the Canara Robeco IPO are attractive, but the issue is entirely OFS, which may go against the issue. So, those who have a long-term perspective may apply for the public issue as the AMC market is expected to leapfrog in the low-interest regime.”
Canara Robeco IPO GMP
Canara Robeco IPO is also witnessing a healthy trend in the grey market. Its GMP today is ₹35, signalling a listing gain of 13% for the investors.
Canara HSBC Life Insurance IPO signals solid gains for Canara Robeco
Meanwhile, in the other IPO opening this week — Canara HSBC Life Insurance — Canara Bank is also set to make an astounding return of 960%.
The weighted average cost of acquisition for Canara Bank for the shares was ₹10. Meanwhile, the Canara HSBC Life Insurance IPO price band has been fixed at ₹100-106 apiece. At the upper end of the price band, the PSU bank is set to make a multibagger return of 960%.
Punjab National Bank, another PSU bank stock, which is offloading stake in Canara HSBC Life Insurance IPO, is also set to make a similar gain on its investment as it plans to offload 9.5 crore shares.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
