MAX. ISSUE SIZE (Rs) : 8750 crores
PRICE BAND (Rs) : 885--950
ISSUE OPENS/CLOSES : 19—22 June,2007
LISTING : NSE, BSE.
A visit to the countryside would drive home the fact that the ongoing ‘ India Growth story’, in its current form is restricted to a very small percentage of the population. Be that as it may, our bourses are reverberating to its beat. Resultantly, and for that very reason, there is no dearth of corporates that feel the time is ripe for hefty pickings, both on the IPO and FPO fronts.
Now, unlike an IPO, the FPO has added intangibles. Merely looking at the company’s prospects do not suffice. One eye also needs to be on the current market price of that company’s listed stock, that of its peers and the overall market trend too.
Lets start with the market price. The differential in case of ICICI Bank’s FPO is not substantial enough to excite. The old trick of part payment upfront coupled with a Rs.50 discount does not cut too much ice as a volatile index stock can swing by that margin and more in just a couple of trading sessions.
When one looks at the bank’s peers, HDFC Bank and UTI Bank with their lesser equity bases and niche operations, reflect a far more lean and mean look. With a poorer CASA, ICICI Bank’s cost of deposits is higher than that of its peers, resulting in poorer NIMs.
Add to this, the funding side pressures on account of interest rates having risen over the last one year, its higher NPA’s and a P/B ratio of over 3, and the fundamental picture that emerges is not as rosy as its marketers would have us believe.
Another potent concern area for any potential investor in this bank’s FPO is its dipping ROE. With this proposed massive equity dilution, things could get worse on this front, at least in the near term.
Finally, we come to the market. It would suffice to say that the indices are close to their peak and showing signs of fatigue. Now, that renders the Rs.50 discount bait to retail investors less attractive. Furthermore, memories remain of PNB’s FPO where the price arbitrage exceeded Rs.100 at the time of issuance but vanished soon after in a market downswing.
So then, where do retail investors stand on this wicket ? While institutional investors can afford to have all the three top private banks in their portfolios, chances are retail investors can afford just one.
And for the reasons enumerated above, as also its tendency to repeatedly pop up in the primary market like the proverbial bad penny, my money wouldn’t be on ICICI Bank.
PRICE BAND (Rs) : 885--950
ISSUE OPENS/CLOSES : 19—22 June,2007
LISTING : NSE, BSE.
A visit to the countryside would drive home the fact that the ongoing ‘ India Growth story’, in its current form is restricted to a very small percentage of the population. Be that as it may, our bourses are reverberating to its beat. Resultantly, and for that very reason, there is no dearth of corporates that feel the time is ripe for hefty pickings, both on the IPO and FPO fronts.
Now, unlike an IPO, the FPO has added intangibles. Merely looking at the company’s prospects do not suffice. One eye also needs to be on the current market price of that company’s listed stock, that of its peers and the overall market trend too.
Lets start with the market price. The differential in case of ICICI Bank’s FPO is not substantial enough to excite. The old trick of part payment upfront coupled with a Rs.50 discount does not cut too much ice as a volatile index stock can swing by that margin and more in just a couple of trading sessions.
When one looks at the bank’s peers, HDFC Bank and UTI Bank with their lesser equity bases and niche operations, reflect a far more lean and mean look. With a poorer CASA, ICICI Bank’s cost of deposits is higher than that of its peers, resulting in poorer NIMs.
Add to this, the funding side pressures on account of interest rates having risen over the last one year, its higher NPA’s and a P/B ratio of over 3, and the fundamental picture that emerges is not as rosy as its marketers would have us believe.
Another potent concern area for any potential investor in this bank’s FPO is its dipping ROE. With this proposed massive equity dilution, things could get worse on this front, at least in the near term.
Finally, we come to the market. It would suffice to say that the indices are close to their peak and showing signs of fatigue. Now, that renders the Rs.50 discount bait to retail investors less attractive. Furthermore, memories remain of PNB’s FPO where the price arbitrage exceeded Rs.100 at the time of issuance but vanished soon after in a market downswing.
So then, where do retail investors stand on this wicket ? While institutional investors can afford to have all the three top private banks in their portfolios, chances are retail investors can afford just one.
And for the reasons enumerated above, as also its tendency to repeatedly pop up in the primary market like the proverbial bad penny, my money wouldn’t be on ICICI Bank.
