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Punjab & Sind Bank IPO looks attractive: Motilal
Punjab & Sind Bank's initial public offering (IPO) of 4 crore equity shares has opened for subscription today. The issue is attractively priced, says Motilal Oswal in its research report.
Punjab & Sind Bank's initial public offering (IPO) of 4 crore equity shares has opened for subscription today. The issue is attractively priced, says Motilal Oswal in its research report.
The bank aims to raise at around Rs 452-480 crore through IPO at a price band of Rs 113-120/share. The issue will close on December 15 for qualified institutional investors (QIB) and on December 16 for other investors.
The report says, "PSB registered loan CAGR of 38%, Deposits CAGR of 31% and Asset CAGR of 32% over FY06-10 with. Bank has less than 1% market share in overall business in India. As on 1HFY11, 26% of deposits, 25% of loans and 24% exposure is towards top 20 accounts."
"At the upper end of the price band PSB will trade at 0.8x FY12 BV as compared to peers at 0.9-1.1x P/BV of FY12E (with stronger return ratios). While the issue is attractively priced, key challenges such as lack of clarity on appointment of new CMD, technology up-gradation (execution risk), margin sustainability(comparatively weak liability franchise), and increase in opex cost (no clarity on pension and gratuity) would be key drivers for the stock performance in our view," according to report.
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