Canara Bank shares hit an over two-year high of Rs 242.60 after they rallied 6 per cent on the BSE in Monday’s intra-day trade after rating agency ICRA upgraded the rating of Bank’s Basel III Tier II Bonds to “ICRA AAA (Stable)” from “ICRA AA+(hyb) (Stable)”. The rating agency has also upgraded its ratings on the Basel III Additional Tier I Bonds to “ICRA AA+ (Stable)” from “ICRA AA (hyb) (Stable)”.
The stock of the public sector bank was trading at its highest level since July 2019. In the past one month, Canara Bank has outperformed the market by surging 37 per cent, as compared to less than 1 per cent rise in the S&P BSE Sensex. It has zoomed 62 per cent against qualified institutional placement (QIP) price of Rs 149.35 per share.
In August, Canara Bank had raised Rs 2,500 crore through QIP by issuing 167.39 million equity shares to qualified institutional buyers (QIB). The Bank had said it intended to utilize the net proceeds towards augmenting the Bank’s Tier I capital to support growth plans and to enhance the business of the Bank.
Ace investor Rakesh Radheshyam Jhunjhunwala held 29.10 million equity shares, or 1.6 per cent stake, in Canara Bank as on September 30, 2021, according to the shareholding pattern data filed by the Bank.
ICRA in rating rational said the rating upgrade factors in the improvement in the solvency profile1 of Canara Bank which is expected to sustain going forward. An improved capital position has supported the bank’s solvency profile, which is expected to get a further boost from improving profitability metrics and expectations of steady internal capital accruals.