SBI gains after government OKs preferential issue of shares

State Bank of India rose 0.97% to Rs 260.10 at 13:01 IST on BSE after the bank said it received the government's approval to increase the paid up capital through preferential allotment of equity shares to the Government of India.

The announcement was made during trading hours today, 19 January 2017.

Meanwhile, the BSE Sensex was up 51.48 points, or 0.19%, to 27,309.12.

On the BSE, so far 7.28 lakh shares were traded in the counter, compared with average daily volumes of 18.44 lakh shares in the past one quarter. The stock had hit a high of Rs 261.80 and a low of Rs 256.65 so far during the day.

The stock hit a 52-week high of Rs 288.50 on 11 November 2016. The stock hit a 52-week low of Rs 148.30 on 12 February 2016. The stock had underperformed the market over the past 30 days till 18 January 2017, rising 1.20% compared with the 3.61% rise in the Sensex. The scrip had, however, outperformed the market in past one quarter, falling 0.90% as against Sensex's 3.10% decline.

The large-cap bank has equity capital of Rs 776.28 crore. Face value per share is Re 1.

In December 2016, State Bank of India (SBI) announced that its shareholders approved a preferential issue of shares for upto Rs 5681 crore to the Government of India. This is part of the government's capital infusion plan into the lender. Shareholders also gave an in-principle nod to additional fund raising by way of a public issue, should the bank need to tap the markets.

Separately, shareholders also approved fund raising upto a limit of Rs 15000 crore via a public issue. This fund raising could be in the form of a follow-on public offer (FPO) or private placement through a qualified institutional placement (QIP) or through other means such as American Depository Receipts (ADRs) or Global Depository Receipts (GDRs). Any such public fund raising would be subject to the condition that the government's shareholding in SBI does not fall below 52%. The announcement was made after market hours on 20 December 2016.

SBI's net profit fell 34.6% to Rs 2538.32 crore on 8.3% growth in operating income to Rs 50742.99 crore in Q2 September 2016 over Q2 September 2015.

SBI is India's biggest bank in terms of branch network. The Government of India currently holds 60.18% stake in SBI (as per the shareholding pattern as on 31 December 2016).

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