Punjab National Bank - PNB IPO

dear traderji ,
is it adviceable to invest in Punjab national Bank , I.P.O.
Kindly suggest with details
thanx

When is the IPO expected?

__________________
Best Wishes!

Traderji

www.Traderji.com

It is a book building issue and is opening from 7th March to 11th March. However, price band is not yet decided and probably will be disclosed on 4th March.

Yankpunjabi, It is best to wait for the price band to be announced before making a decision.

Punjab National Bank informed the Bombay Stock Exchange on Thursday that it had set the price band for its upcoming 80-million-share issue at Rs 350 to Rs 390.The minimum lot size for applying in the said issue is 15 shares, and in multiples thereof

The issue will open on March 7 and close on March 14. At the upper end, the issue will raise up to Rs 3100 cr.

Punjab National, India's fourth-most-valuable bank, is raising funds to improve its capital adequacy ratio as required under the Basel II norms. The state's holding in the bank will drop to 57 per cent from about 80 per cent.

The Punjab National Bank (PNB) has fixed the price band for its forthcoming public issue between Rs 350 and Rs 390 per share. While at Rs 350 per share the bank will raise Rs 2,800 crore, at Rs 390 per share, the bank will raise Rs 3,120 crore, which will be the second largest bank issue in India, after ICICI Bank's Rs 3,150-crore issue in 2004.

After the public issue, the bank will buy back 3 crore shares from the government at the offer price fixed in the book-build method. This means, while at the lower end, the government will raise Rs 1,050 crore, at the upper end, it will get Rs 1,170 crore. As the bank's share closed at Rs 436.70 on Bombay Stock Exchange on Thursday, the merchant bankers' said considering the demand, the offer price is likely to be fixed at the upper end of the band.

The public issue will remain open between March 7 and 11, 2005. The minimum application will be for 15 equity shares and in multiples.

With this issue, the holding of the government in the bank will reduce to 57 per cent from the existing 80 per cent .

The public issue is aimed at augmenting the capital base of the bank to meet future capital requirements after the implementation of the Basel II standards. It will help it to grow at a fast pace. Foreign institutional investors had shown good interest in PNB. Of the present public holding of 20 per cent , 14.15 per cent is held by foreign institutional investors.

Although, the public issue is of 8 crore shares, the capital base of the bank will increase by only 5 crore share as the bank will buy back 3 crore shares from the government and will destroy them. Post-issue, the FIIs' holding can not go beyond 20 per cent of the paid up capital. So, they can buy up to 2.75 crore shares which is 34.37 per cent of the total issue size.
The bank earned a net profit of Rs 735.22 crore in the first 6 months of the current financial year.

The earning per share of the bank, on an annualised basis, on the expanded capital, is around Rs 46.50. At Rs 390, the offer will be 8.4 times of the earnings per share, which is attractive, compared to the industry average of over 10 times.

The bank has achieved 100 per cent computerisation of its branches. With its own 490 ATMs and as a part of sharing arrangements with 4 other banks, PNB has an access to over 2600 ATMs in the country.

Share Offer

Of the shares on offer, 10 percent each will be reserved for employees and existing shareholders. Institutional buyers will be able to bid for 50 percent of the remaining shares, individual investors for 35 percent and ``non-institutional bidders'' for the remainder.

Banks and companies are also trying to take advantage of a 30 percent rise in the benchmark Sensitive Index of the Mumbai stock exchange in the past six months to lure investors. The 17- stock Bankex index has outpaced the benchmark with a 56 percent gain in the same period.

A cut in the corporate tax rate in the budget is likely to benefit banks and their profit may rise by as much as 5 percent, according to analysts such as Citigroup Inc.'s Aditya Narain.

Finance Minister P. Chidambaram proposed to cut the corporate tax rate to 30 percent from 35 percent in the budget he presented to Parliament on Feb. 28. Including surcharges, the rate will fall to 33 percent from 35.875 percent.

Market Expectation

Interestingly, domestic financial institutions, mutual funds and insurance companies are guaranteed to get 40% (around 1.28 crore shares) of the total allotment reserved for qualified institutional bidders (QIB) at 3.2 crore shares in PNB. This is because the FII limit in state-run banks can be only 20% and as on December 31, 2004, FIIs held 14.15% stake in PNB.

FIIs are expected to get a maximum of 60% (nearly 1.92 crore share) of the total allotment for QIBs. However, the position of FIIs after December 31, 2004 should remain at status quo at 3,75,28,972 (14.15%) shares. After the offer for sale, the shareholding of FIIs is expected to reach the threshold limit of 18%. Beyond the 18% FII limit, there is no headroom left for FIIs to buy stake in PNB, and it have to seek Reserve Bank of India’s permission for any further purchase of shares.

Meanwhile, the stock of PNB in the futures market has been trading at a hefty discount of nearly 5% to the cash market. In the futures market, the stock in the March 2005 contract is trading at Rs 419.4 per share, compared to Rs 436.6 per share in the cash market. The huge discount in the price in the futures market has been purely in anticipation that the bidding price for the offer for sale of eight crore shares will be far below the current trading price. Ironically, the market has been right on the mark.

Since the beginning of the March 2005, PNB futures market price has been quoting at a hefty discount to the cash market. Between February 25 and March 3, the PNB stock in the futures markets has been trading at a discount of 3.14% to 4.75% to the spot price. In the same period, the Nifty futures index has been flat to the S&P CNX Nifty.

respected market guru's
now price band is declared , what wud u suggest this new comer to invest or to not
waiting for ur advice