Shares of public sector banks (PSBs) continued their upward movement, with the Nifty PSU Bank index scaling a fresh record high of 5,589 in Monday’s intra-day trade, after the Bank of India (BOI) successfully raised Rs 4,500 crore via qualified institutional placement (QIP).
BOI has allotted more than 5 per cent of the 449 million equity shares offered in the QIP issue to six institutional and domestic investors. The list of investors include, SBI Mutual Fund (52.73 million), Societe Generale – ODI (38.7 million), Morgan Stanley Asia (Singapore) (32.85 million), HDFC Life Insurance Company (31.58 million), ICICI Prudential Life Insurance Company (31.58 million) and ICICI Prudential Mutual Fund (26.73 million).
Shares of BOI hit over five-year high at Rs 120, as they rallied 5 per cent on the back of heavy volumes. The stock was trading at its highest level since February 2018. The average trading volumes at the counter more than doubled today. A combined 31.48 million equity shares had changed hands on the NSE and BSE.
BOI said the bank intends to utilize the net proceeds towards augmenting the bank’s Tier I Capital to meet additional requirements on account of capital conservation buffer and to support growth plans and to enhance its business.
Meanwhile, at 02:20 PM; the Nifty PSU Bank was the top gainer among sectoral indices, up 1.3 per cent, as compared to 0.08 per cent gain on the Nifty 50. In the past one week, the PSU Bank index outperformed the market by gaining 4 per cent, while in the past one month it has rallied 10.5 per cent. In comparison, during the same period Nifty 50 index was up 1.2 per cent and 8 per cent, respectively.
Among the other PSBs, Union Bank of India, Indian Overseas Bank, Punjab & Sind Bank, Central Bank of India and Punjab National Bank were up in the range of 2 per cent to 3 per cent.
Meanwhile, shares of PNB hit over four-year high at Rs 89.35, up 3 per cent on the NSE. Thus far in the month of December, the stock has rallied 15 per cent after rating upgrade from CRISIL Ratings.
A sharp up move in the stock price has seen the market capitalisation (m-cap) of PNB inch towards Rs 1 trillion mark. Currently, PNB’s m-cap stood at Rs 97,425 crore, the BSE data shows.
CRISIL Ratings on November 29, upgraded its ratings on the Tier II Bonds (under Basel III), Lower Tier II Bonds (under Basel II), Upper Tier II Bonds (under Basel II), Perpetual Tier I Bonds (under Basel II) and Infrastructure Bonds of PNB to ‘CRISIL AAA/Stable’ from ‘CRISIL AA+/Positive’ and on Tier I Bonds (under Basel III) to ‘CRISIL AA+/Stable’ from ‘CRISIL AA/Positive’.
CRISIL Ratings believes PNB will maintain its strong market position in the financial services sector in India and will continue to benefit from strong support from Government of India (GoI).
The upgrade in the long-term ratings factors in consistent improvement in the bank’s underlying asset quality reflected by limited slippages, higher recoveries and consequently lower gross non-performing assets (GNPA). This was driven by conscious measures undertaken by the bank to refine its underwriting and recovery mechanisms; amidst multiple challenges faced by it in the past including large legacy accounts, branch integration post-merger of other banks into it and thereafter pandemic’s impact on the economy, CRISIL Ratings said in its rating rationale.
With a healthy provision coverage ratio (PCR) excluding technical write-offs at 80 per cent as on September 30, 2023, the incremental credit costs are expected to be limited, supporting the gradual improvement in the profitability. However, the bank’s ability to contain slippages, manage overall asset quality and sustainably improve its overall earnings profile (even as the bank transitions to ECL framework) would remain a key monitorable, the rating agency said.