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PNB closes at 21% premium over IPO price

BS Banking Bureau

The Punjab National Bank scrip, which was listed on Friday on the Bombay Stock Exchange, closed at a premium of 20.64 per cent at Rs 37.40 to the issue price of Rs 31. The first few trades were executed at Rs 38.75.

The scrip hit a high of Rs 40.10 in initial trades and later on came off to close at Rs 37.40. The scrip logged volumes of about 1.812 million shares, amounting to Rs 67.4 million. The weighted average price for the scrip, which hit a low of Rs 35 in noon trades, was Rs 37.25.

The 107-year-old bank had last month come out with an initial public offer of around 53 million equity shares of Rs 10 each at a premium of Rs 21, aggregating Rs 1.645 billion. The IPO, which was oversubscribed by 4.29 times by the public and 2.85 times by the employees, was for augmenting its long-term resources.

PNB chairman and managing director, S S Kohli, who rang the bell at the BSE to mark the listing of the scrip, said the IPO underscored the fact that the markets have started to view to banking positively.

The successful IPO will enthuse other public banks such as Canara Bank, Central Bank of India, Union Bank of India and Allahabad Bank to tap the market, he added.

On the performance of the bank, the PNB chief pointed out that the bank's total business crossed the Rs 1,000-billion mark at the end of March 2002, thereby registering a 17.5 per cent growth over the previous year.

Credit growth in 2001-02 was 21 per cent as against 25 per cent the previous year. Retail lending was up by 115 per cent in 01-02 at Rs 30 billion.

According to analysts, public sector bank scrips are attracting investor interest off late as their valuations (P/E of 1.5-2.0) were very cheap and dividends declared were also high.

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