PSU Bank stock under Rs 100: Should you buy Canara Bank shares ahead of Canara Robeco and Canara HSBC Life IPOs?

Share price of Canara Bank: After both the entities,  namely – Canara Robeco and Canara HSBC Insurance backed by state-run Canara Bank have filed IPO papers with the market watchdog Securities and Exchange Board of India (SEBI), here is a quick low-down on whether or now you should buy this PSU Bank stock which is trading below Rs 100. At the time of writing this copy, Canara Banks shares traded weak by 0.05 per cent at Rs 97.4 apiece on the NSE.

Earlier post the company’s third quarter results, the lender’s Managing Director K Satyanarayana Raju in an analyst call said, “We are expecting that both the companies may come with their IPOs in the next financial year.”

Canara Bank holds good fundamentals 

Vaibhav Vidwani, Research Analyst at Bonanza Group points out that the company’s shares are currently trading at a P/B or price/ book value of 0.85x, The bank is financially stable with good
fundamentals, with a capital adequacy ratio (CAR) of 16.44.

Furthermore, the bank’s credit to deposit (CD) ratio is at 76.65 per cent reflecting that the bank has the ability to deliver steady credit growth. Additionally, the bank is investing in technology and also reducing bad loans.

Canara Robeco AMC IPO

Canara Robeco AMC, a joint venture between Canara Bank (51 per cent) and ORIX Corporation (49 per cent), has filed for an IPO structured as an Offer for Sale (OFS), meaning no fresh capital will be raised; existing shareholders are selling stakes. Canara Bank plans to divest a 13 per cent stake (about 25.92 million shares), with ORIX divesting 12 per cent, valuing the IPO at roughly Rs 800– 1,000 crore. Canara Robeco AMC is India’s second-oldest mutual fund house, managing about Rs 1 trillion AUM with a strong equity focus (92 per cent of AUM in equity schemes).

Canara HSBC Life Insurance IPO

Canara HSBC Life Insurance, a joint venture between Canara Bank (51 per cent), HSBC Insurance (26 per cent), and Punjab National Bank (23 per cent), has also filed for an IPO via Offer for Sale, with Canara Bank divesting up to 14.5 per cent stake. The IPO could be valued around Rs 16,500 crore, with Canara Bank expected to raise approximately Rs 2,200 crore from its stake sale.
The IPO is part of Canara Bank’s strategy to unlock value and improve capital adequacy. The IPOs are primarily OFS, so Canara Bank will reduce its stake in these subsidiaries, raising capital that could strengthen its balance sheet and support loan growth.

RBI mandates Canara Bank to reduce its holding in these subsidiaries to 30 per cent by October 2029, so further divestments may occur.

Should you buy Canara Bank shares now?

Vidwani believes the upcoming IPOs of Canara Robeco AMC and Canara HSBC Life Insurance are likely to unlock value for Canara Bank and may have a positive impact on its share price over time.