July 19, 2019 | Investopaper
Himalayan Bank Limited (HBL) is one of the leading commercial banks of Nepal. Himalayan Bank was established in 1993 in a joint venture with Habib Bank Limited of Pakistan with an objective to become the bank of the first choice. In July 2013, the paid-up capital of the company was 2.90 Arab which has increased to 8.52 Arab after NRB directed banking institutions to raise paid-up capital to 8 Arab. To meet this requirement, the company distributed bonus and right shares to the shareholders. Here, we will try to analyze the price history of Himalayan Bank Limited.
Price History of Himalayan Bank (HBL)
The graph alongside shows the price history of HBL in the Nepalese stock market since 2013. It shows the low price, high price and average price of the company for the last six years. HBL recorded the highest price of Rs. 1695 during the bullish market in 2016. The company share price increased from Rs. 805 to the maximum point during the bull run. Nepse index rose to 1881 points from 581 points during a 2013-2016 bull period. Likewise, Nepse declined to 1100 once the bear market followed. As a result, the price of the company gradually declined to below 450. The lowest recorded price of HBL in 2019 is Rs. 423.
As shown in the graph, the price of HBL surged in 2016 and then declined throughout. This is mainly because the company has continuously increased its paid-up capital through bonus share distribution. Also, the company issued 7:1 right share to its existing shareholders in 2016. Lately, the company distributed 5 percent bonus and 10.78 percent cash from the profit of fiscal year 2074/75. As of now, the paid-up capital of the company stands at Rs. 8.52 Arab.
This significant increase in paid-up capital ( by more than 2.93 times) is one of the causes of the decline in stock price. The investors who bought the shares of HBL at the highest market price of Rs. 1695 in 2016 will be breakeven at the price of Rs. 864. This amount is calculated by adjusting the bonus and cash dividends received by the shareholders of the company.
Also, the major market crash starting from 2017 led the stock price to slip below Rs. 450 in 2019. But the market comeback and good financial performance of the company has overturned the deficit of the market crash. The net profit of the company until the third quarter of the fiscal year 2075/76 stands at Rs. 2.01 Arab.
HBL Stock Sensitivity relative to Nepse index
The price of HBL at the start of 2013 was Rs. 805 and rallied to Rs. 1695 in July 2016. So, the market value of HBL shareholders increased by more than 150 percent in this period. Similarly, the Nepse index also rose by more than 220 percent at the same time. Likewise, when Nepse declined by more than 40 percent from the peak, HBL market value fell by around 48 percent.
The possible merger between big institutions has also caused the price fluctuation of banking stocks in recent times. The current price of Himalayan Bank is Rs. 559.
To see the complete financial analysis of Himalayan Bank Limited, Click Here.