Punjab & Sind Bank IPO- to invest or not? Keynote

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 note of the IPO of Punjab & Sind Bank Ltd.

Issue Highlights

Price Band                                           : Rs 113-120 per share                                       

IPO open during                                  : December 13 - 16, 2010 (for QIBs issue closes on Dec. 15, 2010)

Book Running Lead Manager               : SBI Capital, Enam, ICICI Securities

To list on                                             : NSE & BSE

IPO Grading                                         : 4 / 5 (CARE)

PE                                                        : 4.23x (based on base price)*

                                                            : 4.49x (based on cap price)*

Market Cap post-listing                        : Rs2,676Cr or $592mn (based on the cap price)

Market Cap of Free Float                      : Rs480Cr or $106mn (based on the cap price)

* Based on FY10 EPS

IPO of 40mn equity shares of Rs10 each, aggregating to Rs480Cr or $106mn (at the cap price)

Executive Summery

·       Punjab & Sind Bank Ltd. was incorporated in June 1908 and was one of the six banks which were nationalized in April 1980.

·       Punjab & Sind Bank Ltd., a Govt. of India undertaking, has over 100 years of operation and has significantly grown its branch network with a presence predominantly in north India. As on 31st October, 2010, the bank has network comprised of 926 branches and 63 ATMs across India.

·       Pursuant to the RBI’s Report titled ‘A Profile of Banks 2009-2010’, Punjab & Sind Bank has outperformed the group average of the public sector banks as well as all banks’ average for fiscal 2010 on several financial and risk management parameters despite currently being much smaller in size than many of the public sector and other banks with which the bank compete.

·       The bank delivers its products and services through a wide variety of channels ranging from bank branches and ATMs. It has branch presence across India, with a presence predominantly in north India, a region which is rich in resources and offer great opportunity for resource mobilization.