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Jai Kumar NR
NEW DELHI, Aug 4: The Jammu and Kashmir Bank has disappointed investors with the share listing at a discount to the offer price. This is despite the fact that the bank's maiden issue received an overwhelming response of around 2 times from the public.
Against the offer price of Rs 38, the share started its maiden quote on August 3, at Rs 40 and closed at Rs 31.15. During the day, the counter attracted hardly any buying with only 3500 shares traded. The scrip touched a high of Rs 40 and a low of Rs 30 during the day. The following day, the scrip opened at Rs 30 and touched a high of Rs 40. However, latter in the day, the scrip hit a low of Rs 28 and closed slightly higher at Rs 31.15.
The bank has listed its shares at a time when the stock markets have been dipping, with the Sensex hovering around 3,000-level. Most of the banking counters (who tapped the market in recent times) are hardly attracting any buyers, except for Corporation Bank, Bank of Baroda and Bank of India. The banks like Dena Bank, State NEW DELHI, Aug 4: The Jammu and Kashmir Bank has disappointed investors with the share listing at a discount to the offer price. This is despite the fact that the bank's maiden issue received an overwhelming response of around 2 times from the public.
Against the offer price of Rs 38, the share started its maiden quote on August 3, at Rs 40 and closed at Rs 31.15. During the day, the counter attracted hardly any buying with only 3500 shares traded. The scrip touched a high of Rs 40 and a low of Rs 30 during the day. The following day, the scrip opened at Rs 30 and touched a high of Rs 40. However, latter in the day, the scrip hit a low of Rs 28 and closed slightly higher at Rs 31.15.
The bank has listed its shares at a time when the stock markets have been dipping, with the Sensex hovering around 3,000-level. Most of the banking counters (who tapped the market in recent times) are hardly attracting any buyers, except for Corporation Bank, Bank of Baroda and Bank of India. The banks like Dena Bank, StateBank of Travancore, State Bank of Bikaner and Jaipur are all now trading much below their offer prices. And investors in these banks are now caught on the wrong foot as lack of secondary market support in these counters has failed to provide them the much-needed exit.
Perhaps, Jammu and Kashmir Bank had tried to cash in on the impressive first-quarter results announced a day before its listing. However, almost all other banks have come out with reasonably good results for the first quarter. J&K Bank has managed to post a net profit growth of 55.3 per cent to Rs 20.5 crore for the first quarter of fiscal 1999 against Rs 13.2 crore in the previous first quarter. Total income saw almost 34 per cent jump to Rs 161.94 crore. Provisions and contingencies have risen by 23 per cent to Rs 21.45 crore. On an expanded equity base of Rs 44.89 crore against just Rs 7 crore the previous year, the annualised EPS works out to Rs 18 against Rs 75 (based on Q1 results) the previous year. Based on the EPS of Rs 18, the shareis trading at a discount of 1.94 times.
Although this leaves scope for further appreciation, the investors may not see a substantial appreciation in the scrip unless the market perception of the bank sees a marked change. With not so many branches outside the state of Jammu and Kashmir, the bank has limited exposure to industry. Also, with so many other banks listed and a host of issues in the pipeline, the banking sector valuation is bound to change. J&K Bank tapped the market with an issue of Rs 70 crore in May 1998 with a premium of Rs 28.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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