Lakshmi Vilas Bank shares may correct further: Analysts1 min read . Updated: 20 Nov 2020, 02:31 PM IST
Lakshmi Vilas Bank shares slump further, hit 52-week low value
Shares of Lakshmi Vilas Bank (LVB) slumped further and fell 10% to ₹9 per share to hit a new 52-week low value in early trade on Friday as investor sentiment remained cautious. The shares of LVB have crashed by over 42% in the last five days. Investors got spooked after the government placed the lender under a one-month moratorium and superseded its board.
"Lakshmi Vilas Bank continue to hit the lower circuit and would correct further, investors who bought in hope of revival, on an expectation of healthy gain got stuck. LVB networth almost got eroded due to escalated provision and weak business. In this merger, shareholder of LVB will not get any benefit," says Jaikishan Parmar- Sr. Equity Research Analyst, Angel Broking.
Reserve Bank of India has proposed to merge capital-starved Lakshmi Vilas Bank (LVB) with DBS Bank India on November 17.
Laxmi Vilas Bank shares were trading at 52-week low values on exchanges.
On Tuesday, The Reserve Bank of India imposed a moratorium on Lakshmi Vilas Bank, capping deposit withdrawals at ₹25,000 till 16 December 2020, while ordering its merger with Development Bank of Singapore. The step was taken in view of the declining financial health of the private sector lender.
"The financial position of The Lakshmi Vilas Bank Ltd. (the bank) has undergone a steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth. In absence of any viable strategic plan, declining advances and mounting non-performing assets (NPAs), the losses are expected to continue. The bank has not been able to raise adequate capital to address issues around its negative net-worth and continuing losses," said RBI in a release dated November17.
LVB is the third bank to be placed under moratorium since September last year after the cooperative bank PMC in 2019 and private sector lender Yes Bank this March. While Yes bank has successfully been revived under the guidance of State Bank, the PMC resolution is still a far cry.