Canara Bank shares surge 5 per cent after stock split, experts predict further upside

Canara Bank's stock market witnessed a surge in buying activity yesterday as shares soared by 5 per cent, coinciding with the implementation of a 1:5 stock split.

This long-anticipated move, approved by the bank's board earlier this year, aimed to enhance liquidity in Canara Bank's shares and make them more accessible to retail investors.

The stock split, effective yesterday, saw Canara Bank shares reaching an intraday high of ₹118.90 per share on the National Stock Exchange (NSE), marking a notable increase from the adjusted close price of ₹113.30 per share on Tuesday.

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Stock market experts are optimistic about the implications of the stock split on Canara Bank's future performance.

The move is expected to amplify trade volume and attract more investors due to the bank's attractive valuations.

Post-split, Canara Bank shares are trading at a promising PE multiple of approximately 1.47, indicating efficient management of funding costs by the PSU bank.

Analysts foresee a further surge in Canara Bank shares, presenting a potential opportunity for investors.

A Mint report cited Saurabh Jain, the Vice President—Research at SMC Global Securities, who underlined the importance of Canara Bank's cost of funding amidst current interest rate trends.

"Canara Bank's CASA ratio, though lower than its peers, indicates a promising low cost of funding and high income in the upcoming quarters," Mint quoted him as saying.

This advantage is expected to position Canara Bank favourably compared to its peers in the banking sector.

Canara Bank's recent financial performance adds to the positive sentiment surrounding the stock.

The PSU lender reported an 18 per cent growth in standalone net profit, amounting to ₹3,757 crore for the quarter ended March 2024, compared to ₹3,174 crore in the same period last year.

Additionally, the company's Board recommended a dividend of ₹16.10 per share, accounting for 161 per cent of face value each, for the financial year 2023-24.

With regards to shareholding, the Government of India holds a 63 per cent stake in Canara Bank, while the remaining 37 per cent is in the public's hands.

Over the past year, Canara Bank stock has delivered impressive returns of 92 per cent to investors, with a 33 per cent gain recorded in the current calendar year.

Technical charts indicate that the stock is currently positioned below all its exponential moving averages and hovering around the 43 mark on RSI, as per Trendlyne analysis.