CSB Bank Share Price Jumps 7.5% on ₹595 Crore Block Deal; FIH Mauritius to Reduce Stake

On June 27, a block deal valued at ₹595 crore resulted in the sale of up to a 9.7% stake in CSB Bank, with FIH Mauritius Investments probably being the seller. Approximately 1.70 crore shares were traded on the exchanges at an average price of ₹353 per share, indicating a discount of nearly 1% from the previous closing price. 

The block deal not only caused a surge in trading volumes for the stock but also boosted its price by 7.5%, reaching a peak of ₹382.50 on the NSE. Trading volumes soared, with 11 lakh shares exchanged so far, significantly higher than the one-month daily average of 3 lakh shares.

According to the latest shareholding data, the promoter held a 49.72% stake in CSB Bank, which will decrease to 40% following the stake sale. IIFL Securities has been appointed as the sole broker for this transaction, which includes a 90-day lock-in period for the shares being sold. 

In November 2023, the Reserve Bank of India (RBI) granted the lender's promoter approval to retain a 26% stake, instead of the previously mandated 15%. Initially, the RBI required bank promoters to reduce their shareholding to 15% to encourage broader ownership of these institutions. However, this requirement was modified following a legal dispute with Uday Kotak, the promoter of Kotak Mahindra Bank. 

ICICI Securities believes that this stake sale by FIH could be part of a gradual reduction of the promoter's stake, as mandated by the regulator. 

CSB Bank reported a 3.1% year-on-year (YoY) decline in net profit, amounting to ₹151.5 crore for the fourth quarter that ended on March 31, 2024. In the corresponding quarter of FY23, the bank posted a net profit of ₹156.4 crore. However, net interest income (NII)—the difference between the interest income earned from lending activities and the interest paid to depositors—increased by 11%, reaching ₹387 crore compared to ₹349 crore in Q4 of FY23. 

In the fourth quarter, gross non-performing assets (GNPAs) were at 1.47%, up from 1.22% in the third quarter of FY24. Net NPAs rose to 0.51%, compared to 0.31% quarter-on-quarter (QoQ). In monetary terms, gross NPAs amounted to ₹361 crore, an increase from ₹278.7 crore in the December quarter (Q3). Conversely, net NPAs in Q4 decreased to ₹124.9 crore from ₹702.3 crore in Q3.

CSB Bank Ltd, an India-based private sector bank, operates through four segments: Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations. The bank provides a range of products and services, including personal banking, premier banking, loans, non-resident Indian (NRI) banking, agri/financial inclusion (FI) banking, small and medium-sized enterprises (SME) banking, and corporate banking.

The Bank provides a variety of accounts, including savings accounts, current accounts, fixed deposits, and other related services. Additionally, it offers various types of loans such as retail loans, two-wheeler loans, gold loans, and home loans. For non-resident Indians (NRIs), the bank offers several banking solutions, including non-resident ordinary accounts (NRO Accounts), non-resident (external) rupee accounts (NRE), foreign currency (Non-Resident) account (banks) scheme (FCNR (B) accounts), and resident foreign currency accounts (RFC). In the agri-banking sector, the bank includes services like financial literacy and credit counseling.