Chennai-based Indian Bank that had its net worth wiped out in 1996 by posting over Rs1,600 net loss in 1996, made its debut on the Indian bourses on Thursday, listing at a premium of 15.38% over its offer price of Rs91 on the Bombay Stock Exchange. The stock dipped to a low of Rs77 in intra-day trading but closed at Rs98.70, a premium of 8.46%, over its offer price.
Over five crore shares were traded during the day. Foreign institutional investors (FIIs), led by the government of Singapore, bought the stock, an industry source says. FIIs own 6.8% stake in the bank which has brought down the government’s stake to 80% following the initial public offering. Under the law, FIIs can hold up to 20% in any listed public sector bank.
Analysts say Indian Bank would have had a better debut, had the market sentiment been robust. After a 540.74 points fall on the Budget day, the benchmark market index rose 221.46 points on Thursday.
At Rs91, the Indian Bank issue is the most expensive public sector bank issue in the primary market. It was subscribed 32.16 times.
“This bank has a good restructuring story and is doing a lot in terms of innovations. I feel that in a better market environment, the share would have listed at a higher premium,” says Vishal Goel, a banking analyst with Edelweiss Securities, a domestic brokerage.
With the rise in interest rates and a slew of measures of the Reserve Bank of India (RBI) to tighten liquidity, bank stocks have not been faring well on the bourses amid apprehensions that banks will take a hit on their bond portfolio.
The bond portfolio depreciates when interest rates rise.
The BSE Bankex, consisting of 16 stocks of the country’s premier banks, has fallen a little over 15% from a high of 7,594 points it touched on 8 February 2007, when the benchmark index breached the 14,000 mark .
State Bank of India has lost 13.4% from a high of Rs1,200 it touched on 8 February 2007. India’s largest private sector bank, ICICI Bank, lost 16.6% and HDFC Bank lost 15.2% from their recent highs.
RBI has raised short term policy rates four times in the current financial year.