In a chat with ET Now, Ganesh Shanbhag of SMS Financial Services talks about the Karnataka Bank rights issue. In a chat with ET Now, Ganesh Shanbhag of SMS Financial Services talks about the Karnataka Bank rights issue. Talking about the Karnataka Bank rights issue, the obvious judgement would be that it is coming at a discount. So if you are holding the shares, subscribe to it. Is it as simple as that? This is a good issue. You should subscribe because the rights is at a price of Rs 85 in the ratio of 2 shares for every 5 shares. The stock is at a one-year low currently. It is at an all time low for a one year period and in spite of that you are getting 20-25% discount on that. The book value itself is around Rs 120 pre-dilution. We are expecting a PAT March 2011 of around 150 crore on an expanded equity capital of 188 crore. It’s worth while subscribing to the rights issue. In addition to that it has registered an impressive growth. Its point to point growth also has been fairly impressive. But is there any negative point that investors need to watch out for? Not really, though I know where you were hinting. I do not think that is any reason to worry. The fact that the logo is not registered or something like that, we are just running through it. But that is a minor thing. I do not think you need to really worry about that. Trigger might be that there is no core promoter over here. HSBC Investments in Dubai holds around under 5% over here. That could be a major trigger as and when the banking licences are issued out or banking reforms come in. Then probably this might be an excellent takeover candidate because there is no core promoter in this bank. If someone is holding the stock, should he just go out and subscribe? Absolutely, close your eyes and subscribe to it. It is a good time because being March-end, not many people subscribe to issues like this and it’s a good opportunity to get into the stock. Have you looked at the stock? Is Karnataka Bank performing well as a bank, financially, for the last couple of years? It is doing well and that is why I said we are expecting a PAT of around 150 crore and expanded equity capital of 188 crore. It’s a good bet to subscribe to the rights issues and buy it. Is there anything else that you have spotted in the market? Nothing immediately.

Karnataka Bank rights issue is worth subscribing: Ganesh Shanbhag, SMS Financial Services

Ganesh Shanbhag of SMS Financial Services advises investors to subscribe to Karnataka Bank's rights issue, which is offered at a 20-25% discount (Rs 85 per share in a 2:5 ratio). The bank's stock is at a one-year low, with expectations of a Rs 150 crore PAT and expanded equity capital of Rs 188 crore. The lack of a core promoter and potential takeover prospects are highlighted, though minor issues like unregistered logos are considered negligible.