Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd
Shares of Lakshmi Vilas Bank (LVB) suspended, from the NSE, as the bank merges with DBS Bank on November 27 and the stock will be delisted from the exchange on that day.
For Client of LVB, All the branches of the LVB will function as branches of DBS Bank India from November 27. Customers, including depositors of the LVB will be able to operate their accounts as customers of DBS Bank India with effect from November 27, 2020. Consequently, the moratorium on the LVB will cease to be operative from that date.
The investors who bought in hope of revival, on an expectation of healthy gain got stuck. As LVB networth almost got eroded due to escalated provision and weak business.
In this merger shareholder of LVB will not get any benefit, The entire capital of the bank will be written off post the merger with DBS Bank India Ltd (DBIL). compression in loan book impacted NII and other income which weakened pre-provision profit and continues deterioration of asset quality issue kept provision cost high for the last several quarters and these combinations led to losses. consequently, net worth got eroded and CRAR went way below regulatory requirement.
We believe a merger would be beneficial for DBS bank as it would be able to grow business in the south that has business and individual route to Singapore. As of Q1FY21 DBS CRAR stands at 15.99% and GNPA and NNPA at 2.7% and 0.5%, respectively. DBS is ready to put fresh capital to initiate new business.
Shares of LAKSHMI VILAS BANK LTD. was last trading on November 25, 2020 at Rs.7.65 as compared to the previous close of Rs. 7.3. The total number of shares traded during the day was 8648194 in over 4712 trades.
The stock hit an intraday high of Rs. 7.65 and intraday low of 6.95. The net turnover during the day was Rs. 62248170.