In attempt to unlock some value, IDBI Bank may try to sell shares of unlisted companies in this calendar year, RK Bansal, ED & CFO, IDBI Bank told CNBC-TV18 today.
In attempt to unlock some value, IDBI Bank may try to sell shares of unlisted companies in this calendar year, ED and CFO RK Bansal told CNBC-TV18 today. There were reports on the street that IDBI Bank is eyeing sale of 3.2 crore shares of 100 companies in April.
Bansal said that the bank had already appointed merchant bankers for some of these deals, however, as the current quarter is almost near end, concrete decision will be taken only in the next fiscal.
The company had earlier come up with an initial public offering (IPO) of CARE. Bansal stressed that this was also part of its ongoing strategy of unlocking value of valuable assets.
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"We will be looking for unlocking the value in this calendar year but finally what type of money we can raise actually depends on so many things some of these companies are infrastructure companies for the captive market and some of these are financial institutions, construction companies,” Bansal said.
It must be noted that shares of IDBI bank have been hammered since past few months. The stock which had hit a 52-week high of 118.20 in January 2013, plunged to Rs 78.90 in span of two months, creating a new 52-week-low today.
Below is the verbatim transcript of the interview
Q: Could you walk us through what kind of sales you have lined up in terms of some of your unlisted exposure and what kind of money IDBI hopes to raise from that process?
A: This is not new that IDBI has been trying to unlock some of the values in unlisted shares. In fact, we came out with initial public offering (IPO) of Care, which was also part of that strategy and some of the other investments which we hold, which are long-term, but we need to wait for the right time to actually exit on that. So we keep on discussing. I don’t know from where this news has come but frankly speaking this is a general strategy which we keep on following.
Q: No plans for any specific sales within this quarter itself that may show up in the numbers?
A: No. This quarter there are only two days so, nothing can be done now. We keep on discussing. We had appointed some of the merchant banks for one or two things, but nothing has materialised and in this quarter I don't think anything will happen as of now.
Q: Within this calendar year are you looking at any of the sale and what kind of money do you think you could raise via this process?
A: We will be looking for unlocking the value in this calendar year but finally what type of money we can raise actually depends on so many things some of these companies are infrastructure companies for the captive market and some of these are financial institutions, construction companies, these are the type of companies which are not listed and perhaps the price discovery is not there as of now. Saying that how much money we can raise it will be very difficult depends on timing, depends on so many other issues, regulatory issues.
Q: Just wanted your view on how the asset quality situation is panning out currently. Your gross non performing assets (NPA) stands quite elevated at 3.7 percent in the last quarter, how much more pressure are you expecting to see in this up coming quarter and what kind of slippages do you see IDBI Bank managing in terms of a run rate per quarter?
A: We have been having NPAs of about Rs 300 crore to Rs 400 crore in every quarter but this quarter recoveries have been very good. September was a peak from an NPA perspective. December it happened mainly because of one or two big cases which are known to media also. In March up to now what we have seen is that NPA increase is not very substantial and there has been growth in advances, so it will come down. But the pressure is there. So hopefully this March quarter for the banking system as a whole will be the last quarter where in perhaps maximum restructuring or NPA will happen. But as per IDBI is concerned, the percentage will be lower than this number.
IDBI Bank stock price
On April 01, 2015, IDBI Bank closed at Rs 72.75, up Rs 1.70, or 2.39 percent. The 52-week high of the share was Rs 116.50 and the 52-week low was Rs 58.55.
The company's trailing 12-month (TTM) EPS was at Rs 5.26 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 13.83. The latest book value of the company is Rs 147.38 per share. At current value, the price-to-book value of the company is 0.49.
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