Financial Daily from THE HINDU group of publications
Thursday, Feb 12, 2004
Financial Daily from THE HINDU group of publications Thursday, Feb 12, 2004 |
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Credit Rating Money & Banking - Private Banks Markets - Stocks Fallout of broking firms' downgrade — ICICI Bank share price moves down 8 pc Our Bureau
Mumbai , Feb. 11 A DAY after ICICI Bank announced its Rs 3,500-crore equity issue to the Indian public, its share price today plunged by about 8 per cent on both the BSE and NSE. The shares, which had increased by around four per cent yesterday, immediately after the announcement, fell by 7.98 per cent on BSE to Rs 318.15 and by 8.66 per cent on NSE to Rs 318.10 today. Total number of shares traded today on BSE were 41.02 lakh and on NSE were 71.66 lakh. The 52-week high for the stock price was Rs 351.95 and the low was Rs 119.10. According to brokers, some broking firms including CLSA Asia Pacific today downgraded the bank, resulting in the fall. ICICI Bank stock had rallied by as much as 120 per cent since CLSA's previous upgrade in August last, outperforming its sector peers by 70 per cent. The bank has also outperformed the broader market by an even larger 75 per cent during this period, said the report. The upgrade had been driven by an expected upturn in banks asset quality that has already come through and has largely been played out.Meanwhile, large deliveries worth close to Rs 300 crore were taken in the bank's stock on Tuesday with the NSE and BSE reporting share deliveries of 45 lakh and 42 lakh respectively. The private bank is to tap the domestic market in April with a bumper issuance of Rs 3,000-3,500 crore officially meant to fund its retail asset book. However, according to analysts, the funds could be used for provisioning of bad loans, for expansion of its nascent international network and to capitalise its insurance venture. According to the report released by CLSA, "... with the bank now planning to undertake a large 20 per cent equity dilution and investing in its overseas foray, its ROE (return on equity) will drop 3 per cent." It further added, "Post issue FY05, EPS (earnings per share) will rise 5 per cent to Rs 25.9." The report also stated that premium valuations compared to other banks would come under pressure. The valuations of the bank at 2.4 times its book value for FY05 is at a premium to most of its domestic as well as regional peers and is likely to come under pressure considering the large equity overhang.
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