A decade ago, Indian Bank had announced over Rs 1,600 crore net loss, the highest-ever posted by any state-run bank in India, and got its entire net worth wiped out. | |
| Today, the Chennai-based bank is planning to enter the capital market with an initial public offer (IPO) carrying a premium that could be the highest-ever claimed by any nationalised bank. |
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| The bank is yet to appoint a merchant banker for its maiden public issue which is expected to carry a premium of around Rs 90 for a share with a par value of Rs 10. "It will follow the book-built route. The price band could be anywhere between Rs 90 and Rs 100," a merchant banking source said. |
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| Indian Bank Chairman KC Chakraborty declined to comment. The bank is planning to enter the market sometime in January and dilute the government's stake to 75 per cent. |
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| State Bank of India claimed a premium of Rs 90 when it had its maiden public float in 1994. Among the nationalised banks, Bank of Baroda sold its IPO at a premium of Rs 75 and Corporation Bank at Rs 70. |
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| Oriental Bank of Commerce, Allahabad Bank, Andhra Bank and a few others entered the market at par value (Rs 10) while Canara Bank claimed a premium of Rs 25 and Punjab National Bank Rs 21 for their IPOs. |
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| Incidentally, HDFC Bank and UTI Bank in the private sector also had their IPOs at par value (Rs 10). |
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| In a two-stage recast, Indian Bank's equity base has come down to Rs 344 crore from Rs 4,575 crore. First, its accumulated losses were written off and then part of its equity (Rs 400 crore) was converted into preference shares. It has posted a net profit of Rs 334 crore in the first half of the year after posting Rs 504.47 crore net profit last year. |
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| The earnings per share for the trailing twelve months works out to 17.33. Even at a premium of Rs 90, the price earning ratio is around 5.30 times, much lower than the Indian banking industry's average of 14.35 times. |
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