The Hindu Business Line : ICICI Bank hits new high on plans to list subsidiaries

Mumbai, Jan. 10 Share prices of ICICI Bank surged to an all-time high today after its Managing Director, Mr K.V. Kamath, said that the bank plans to list four of its subsidiaries, starting with its broking firm.

The subsidiaries that are proposed to get listed are ICICI Securities and the bank’s home finance subsidiary and two insurance arms.

Mr Kamath also mentioned that the bank could also list its mutual fund arm and ICICI Ventures Ltd, a private equity firm, at some point.

The bank shares gained 3.53 per cent at Rs 1,356.70. During intra-day trading, it touched its 52-week high of Rs 1,399.90

ICICI Bank was also among the top gainers of the day. And this month alone, its share price increased by 10.21 per cent.

Unlock value

Analysts say that the shares are gaining as the bank plans to unlock its value in four of its subsidiaries through listing.

“This run up that we have been seeing in the ICICI Bank stock is due to the news of the de-merger, as it is always beneficial for companies when they decide to de-merge as there will be a lot of value unlocking taking place. When these subsidiaries are within the company the sum-parts of its valuations will be rather moderate,” said an analyst with a brokerage.

“Once the subsidiaries breakaway from the main company, the existing shareholders will get the shares of the de-merged subsidiaries. With these subsidiaries now becoming individual entitiesICICI Bank will grow considerably,” said Mr Sanjay Someshwar, Sub-broker, Ventura Securities.

SBI problems

On the other hand, SBI seems to be facing problems with its merger plans.

The SBI stock did not do well on the bourses today with the stock losing 2.20 per cent. The banking sector is doing reasonably well and the BSE-Bankex was up by 0.03 per cent today.

And for the month of January, the BSE-Bankex was up 4.64 per cent. Market watchers expect further rise the bank’s share prices.

However, Mr Someshwar says that once they subsidiaries get listed, there might be a drop in share prices of ICICI Bank due to profit booking by the investors.

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