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Stock market today: Shares of Central Bank of India , a state-owned bank, ended in the red for the third consecutive session on Wednesday, April 2, falling another 11% to slip below ₹ 37 and hit an 18-month low of ₹ 36.86 per share, taking the three-day cumulative fall to 16%. The last time the stock was at this level was in September 2023.
After ending the last eight months in the red, losing 33% of its value, the stock extended its losing streak into the current month, declining another 14% so far. At current levels, the stock is trading 52% lower than its February 2024 peak of ₹ 77. What's dragging down Central Bank of India's stock price? The stock has been on a downward spiral since last week when it issued shares to qualified institutional buyers (QIBs) via the QIP route, along with three other PSU banks —Punjab and Sind Bank, UCO Bank, and Indian Overseas Bank.
Life Insurance Corporation of India emerged as the top investor in the QIP of shares by these four public sector banks. Other investors in the fundraising include SBI Life Insurance, ICICI Prudential Life Insurance, non-bank lender IIFL Finance, a group of pension fund schemes, and state-owned banks. All state-owned banks undertook this fundraising exercise to reduce the government's shareholding in compliance with the Minimum Public Shareholding (MPS) norms.
The government’s stake in all four banks exceeds 90%. For instance, the Indian government owns an 89.3% stake in the Central Bank of India, with an additional 3.
16% held by the Life Insurance Corporation. Foreign institutional investors (FIIs) hold a 1.3% stake, while general shareholders own 3.
6% as of the end of the December quarter. In January, the government approved a ₹ 2,000 crore fundraising plan for five PSU banks to help them comply with the MPS requirement, which mandates at least 25% public holding. Q4FY25 preview: What to expect from PSU bank earnings? Domestic brokerage firm Motilal Oswal expects PSU banks to report modest earnings growth of 4.
5% year-on-year (YoY) (up 4.8% quarter-on-quarter) amid a slight decline in net interest margins (NIMs), offset by controlled operating expenses and a pick-up in other income. Net interest income (NII) is projected to see a modest 2.
8% YoY growth as NIMs remain under pressure. Accordingly, the brokerage estimates PSU banks will report a 9% compound annual growth rate (CAGR) in aggregate earnings over FY25-27. "Operating expenses are likely to remain under control and should follow a normalized trajectory for PSU banks.
Treasury performance is expected to improve quarter-on-quarter amid a decline in bond yields, though equity markets have remained volatile," the brokerage said. On the asset quality front, Motilal Oswal expects stability. "While Q3 witnessed a rise in the SMA (Special Mention Accounts) pool for some banks, it is expected to recover without leading to slippages.
Consequently, credit costs should remain largely under control. The newly revised norms for the sale of government-guaranteed Security Receipts (SRs) should release excess provisions for PSU banks, which they can utilize for potential requirements," the brokerage added. Meanwhile, Central Bank of India's standalone net profit jumped 33.
58% to ₹ 958.93 crore in Q3 FY25, compared to ₹ 717.86 crore in Q3 FY24.
Total income increased 6.56% to ₹ 9,738.64 crore in Q3 FY25, compared to ₹ 9,138.
93 crore in the corresponding quarter of the previous year. Disclaimer : The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint.
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