Federal Bank Ltd. Managing Director and Chief Executive Officer Shyam Srinivasan offloaded part of his shares held in the lender due to a margin call triggered on credit facilities availed by him to fund his employee stock option scheme.
Total number of shares sold due to the margin call was two lakh, the bank said in an exchange filing last night.
A margin call gets triggered on a shortfall of margin money or payment default. One of the reasons could be mark-to-market difference of securities provided as collateral to the lender.
Disclosures under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 made to stock exchanges reveal that Srinivasan had recently converted 35.3 lakh shares under the bank's employee stock option scheme, post that the total holding for him stood at nearly 84.1 lakh shares in Federal Bank.
Before conversion of the above mentioned ESOPs in July 2018, he had earlier sold 2.5 lakh shares on March 29.
The margin call could have been triggered due to the fall in shares of Federal Bank. Shares fell 14 percent in the last one month and are down nearly 30 percent year-to-date.
Here's what brokerages had to say on the factors behind the stock's fall:
UBS
- Stocks hit due to recent floods in Kerala, as it's one of the largest private banks in the state. The bank's 25 percent loan book ex-corporates is from Kerala, while 69 percent of its current account savings account, or CASA, deposits are also from the state,
- Small and medium enterprise loans (16.8 percent of total loans) and retail and agriculture loans (ex-gold loans, at 9.2 percent) are likely to be highly impacted by the floods, it said, adding that loan repayments and collections could be impacted.
- Cut earnings estimates for FY19 and FY20 by 9 percent and share target price to Rs 105 from Rs 115 apiece.
Deutshe Bank
Deutsche Bank, in an August-end note, said the impact of Kerala floods would be limited as the proportion of exposure to flood-affected areas (5-6 percent of total loans) is not very high. It expects the impact of Kerala floods to be only 1 percent on the bank's book value. It maintained a ‘Buy' rating on the stock, with a target price of Rs 115.
Marquee investors such as Rakesh Jhunjhunwala and institutional investors like Amansa Holdings, East Bridge Capital, Franklin Templeton hold substantial investments in Federal Bank.
Shares of the lender were trading 1.31 percent higher at Rs 77.30 apiece on the BSE in early trade.
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