Shares of Equitas Small Finance Bank Ltd. hit a 52-week high after Kotak Institutional Equities maintained a "buy" call amid the Reserve Bank of India allowing SBI Fund to buy a stake in the bank.
Kotak Institutional Equities, in a Jan. 3 note, retained its "buy" call while raising its price target to Rs 65 apiece from Rs 60 apiece, citing "stabilization in leadership at the bank and the progress on the reverse-merger."
The brokerage was referring to the banks' Chief Executive Officer, PN Vasudevan's decision to stay on until the board and regulator deem it appropriate, as well as the SFB's merger back to its parent company, Equitas Holdings.
"The reverse-merger offers a potential upside to investors driven by a net reduction in outstanding shares from 125 crore to 111 crore and liquid assets held by Equitas Holdings accreting to the net worth of the merged entity," the brokerage said. "We see an opportunity for stock performance led by the merger."
Separately, the central bank allowed SBI Funds Management, one of the largest mutual fund managers in the country, to buy up to 9.99% of Equitas SFB through its MF schemes.
The approval is valid for a period of one year, according to an exchange filing after market hours on Jan. 3.
Shares of the company gained 7.6% to Rs 63.9, a fresh 52-week high intraday. This is the most the stock has jumped since Dec. 27.
At close however, the stock pared all gains and ended 0.08% lower at Rs 59.3 apiece.
All 15 analysts tracking the company have a 'buy' rating, according to Bloomberg data. The 12-month consensus price target implies an upside of 10.9%.
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