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Banking industry

Expert Insights on Rights Issues of Midcap Banks: Central Bank and State Bank of Bikaner

Strategic Insights

— 1 min read

As Central Bank and State Bank of Bikaner prepare for their respective rights issues, expert Ganesh Shanbhag shares valuable insights on the opportunities and potential benefits for investors. In an exclusive interview with ET Now, he outlines the reasons why he believes investors should subscribe to the rights issue of these midcap banks, citing their relatively low valuations, strong growth prospects, and government ownership.

Key Takeaways:

  • Central Bank, with its 80% government ownership, has a potential for divestment in the future, making it an attractive investment opportunity.
  • The rights issue is priced attractively, with a book value of Rs 106 and a rights ratio of 3:5, making it a good time to invest.
  • The bank's 100th year celebration is expected to lead to a reward for investors, potentially in the form of a higher dividend.
  • State Bank of Bikaner, with its 75% government ownership, is also an attractive investment opportunity, offering a discounted price and potential for merger with State Bank of India.
  • The rights issue of State Bank of Bikaner has a favorable pricing, with a ratio of 2:5 and an issue price of Rs 390, making it a good time to invest.
  • Investors may consider buying State Bank of Bikaner instead of State Bank of India, as it offers similar growth prospects but at a discounted price.
  • Monsanto, a 74.5% subsidiary of an MNC, is expected to benefit significantly from the changed regulatory environment, making it a potential beneficiary of the rights issue.

Statistics:

  • Central Bank's book value is Rs 106.
  • The rights ratio for Central Bank is 3:5.
  • The rights issue price for Central Bank is Rs 103.
  • The market price of Central Bank fell to around Rs 200 in the last full year, but is currently close to its near-bottom.
  • State Bank of Bikaner's rights issue price is Rs 390.
  • The ratio for State Bank of Bikaner's rights issue is 2:5.
  • The government of India owns 80% of Central Bank and 75% of State Bank of Bikaner.

Sources:

  • ET Now interview with Ganesh Shanbhag, SMS Financial Services.
  • Times of India.

Please note that the statistics section includes the figures mentioned in the interview, but it may not be an exhaustive list of all the statistics mentioned in the article.

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