The 4 crore equity shares initial public offering (IPO) of state-owned Punjab & Sind Bank has opened for subscription today. The bank aims to raise at around Rs 452-480 crore through IPO at a price band of Rs 113-120 per share.
IPO comprises of equity shares of `10 each for cash at a Price Band of Rs. 113 to Rs. 120 per Equity Share and through a 100% Book Building process. The Issue closes on December 15, 2010, for Qualified Institutional Buyers (“QIBs”) and on December 16, 2010, for all other Bidders.
A discount of 5% to the Issue Price determined pursuant to the completion of the book building process shall be offered to Retail Individual Bidders and Eligible Employees. The minimum bid lot has been fixed at 50 Equity Shares and in multiples of 50 Equity Shares thereafter.
Tulsian said, “At the upper price band of Rs 120, fresh issue is being made at book value, which stood at Rs 119.20 as of 30-09-10. Considering expected EPS of around Rs 30 for FY11, the PE multiple works out to 4 times, again very attractive.”
“Empirical data suggests that PSU banks have rewarded, in the long-term. United Bank of India had made its IPO in February 2010 at Rs. 66 per share (at PE multiple of less than 4x and PBV multiple of 0.7x). Currently United Bank is trading at 106. Bank of Maharashtra had also made its IPO at similar PE and PBV multiples in February 2004, at Rs. 23 per share, which is now close to Rs. 63. Although the PE multiples have increased in case of this IPO, the prospects seem bright. Considering the attractive pricing, the issue is recommended for subscription even at upper band!” he said.
The Book Running Lead Managers to the Issue are SBI Capital Markets Limited, Enam Securities Private Limited and ICICI Securities Limited.
Tags: Punjab & Sind Bank