Kochi, Nov 2: The recent crash in the stock markets may not cast a shadow over the forthcoming Initial Public Offering (IPO) of the State Bank of Travancore (SBT). SBT top brass here told this paper that the preparation for the issue is in full swing and they are not planning to reschedule the issue.

"We are confident that the issue will be a success. We are not planning to reschedule the issue at present," said a top SBT source. He said the bank is depending on its strong fundamentals to see the issue through. Compared to public issues which recently entered the market, the SBT issue has been priced more attractively and competitively, he said.

While the price of the Corporation Bank issue, which was oversubscribed by several times, worked out to be Rs 80 at a premium of Rs 70 for a Rs 10 share, the comparative figures for SBT worked out to Rs 60, a premium of Rs 50 per share with a face-value of Rs 10.

He said the bank has an impeccable track record of profit making and dividend payout consistently for the past 35 years, adding "our post issue EPS (Earning Per Share) will be much above the industry average".

According to him, the issue is attractive in terms of its minimal application money when compared to other public issues. SBT has also decided to peg the market lot at five in a bid to attract small investors. Analysts here feel that the IPO of Kerala's premier bank issue would hit a bulls eye as the fundamentals of the bank is strong. Though the timing of the issue is all that not auspicious the issue will sails through, analysts said.

"Compared to the ICICI Bank and Corporation Bank offers, SBT issue is more attractive", said a prominent dealer. SBT's maiden public offer is slated to hit the market on December 8. The bank has proposed to issue 15 lakh equity shares of Rs 100 each at a premium of Rs 500 to mop up Rs 90 crore.

According to SBT sources, the bank will offer a major chunk of the issue to retail investors. The net offer to the public will be 8.07 lakh shares aggregating Rs 48.47 crore and 2.3 lakh shares to NRIs and OBCs. The bank has reserved 1.15 lakh shares worth Rs 6.92 crore for its employees. The issue, which will be lead-managed by Industrial Development Bank of India and ICICI Securities and Finance Company Ltd, will be listed on the Cochin Stock Exchange, Bombay Stock Exchange and National Stock Exchange.

The Rs-10,000 crore bank had reported its highest-ever gross profit of Rs 184.68 core during the last fiscal, registering a growth of 24% over the corresponding period previous year. The capital adequacy of the bank stood at 8.17 per cent as on March 31, 1997. The bank also have a strong NRI clientle with foreign currency deposits to the tune of Rs 2,500 crore as of March 31, 1997. The bank has declared a dividend of 22% last fiscal. This year SBT has projected a payout of 25%. However, the downturn in credit offtake has sent the profit estimates of the bank haywire during the first half of the current fiscal. The bank has projected a profit of Rs 214 crore but could only net a profit of Rs 104 crore. However, SBT source maintained this is much above the industry average.

He said that the profitability of the bank during the second half of the current fiscal would go up considerably, following the concessions announced by the RBI in its credit policy.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.