PSB up 22% on debut, will need cap infusion in 2 yrs

State-run Punjab and Sind Bank (PSB) had an impressive listing on Thursday, shooting nearly 22 per cent in first trades, even as the lender’s management said a new round of capital infusion would be required in two years.

The shares, allotted at Rs 120 through an initial public offer (IPO), opened nearly 22 per cent up, at Rs 146.10 on the Bombay Stock Exchange. As the trading session progressed, the scrip stabilised at around eight per cent gains over the allotment price. The New Delhi-headquartered bank’s Executive Director P K Anand said the Rs 470-crore the bank has raised via the IPO would sustain the bank for two years, after which it will have to go for a new round of capital raising.

“Looking at market conditions, we can think of an FPO, a rights issue or (raising money through other) tier-II (instruments like bonds),” Anand said, adding, the IPO has helped the bank to achieve an overall capital adequacy ratio of 14 per cent.

PSB is last of the 19 public sector banks to list and the IPO was over-subscribed 50 times primarily because of lower valuation. The government has diluted around 18 per cent through the issue.

The scrip was trading at Rs 131.50 at 1155 hours on the BSE, up around eight per cent and had hit an intra-day low of Rs 127.60 and a high of Rs 149.70.

Anand said the non-performing assets (NPA) were a “ key area of concern” for the bank, which had witnessed a healthy 36 per cent rise in credit offtake every year for the last five years.