‘Subscribe’ to Punjab & Sind Bank IPO: Hem Securities

MUMBAI: Hem Securities has advised investors to ‘ Subscribe’ to initial public offering of Punjab & Sind Bank, a Government of India undertaking. It finds the issue a very attractive destination to deploy the funds. The issue opens Monday.

“The bank is bringing the issue in the price band of Rs 112-120 at P/E multiple of 4.56-4.84 on post issue EPS of Rs 24.78 (Basis Annualized PAT for H1FY’11).

It outperformed its group average of the public sector banks as well as all banks’ average for fiscal 2010 on several financial and risk management parameters like return on advances as adjusted to cost of funds, (ii) return on assets, (iii) net NPA ratio and (iv) business per employee, despite currently being much smaller in size than many of the public sector and other banks with which it compete.

Therefore, looking at the valuations and all of the above, we find the issue a very attractive destination to deploy the funds. Hence we recommend investor to “Subscribe” the issue,” the report said.

The bank is raising funds to augment its capital base, to meet the capital adequacy norms for future capital requirements, growth in its assets, primarily its loan and investment portfolio due to the growth of the Indian economy and for other general corporate purposes.