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BL Research Bureau

After remaining sluggish for a long time, the PNB Gilts stock has risen by 37 per cent over the past two weeks, on expectations of the company being put on the block.

On Thursday, Enam Securities has announced a strategic stake sale in a primary dealer and invited “Expressions of Interest” from interested bidders.

The details provided in the announcement and other recent events suggest that the company in question may be PNB Gilts. The latter recently informed the Bombay Stock Exchange that its promoter company PNB is proposing to divest stake. The last date for receipt of EOIs is August 14.

Punjab National Bank holds 74.07 per cent in the subsidiary and has been mulling various options for the subsidiary since last year, given that many of the services offered by the subsidiary could be undertaken by the bank itself.

Last year, there were reports of a possible stake sale at Rs 35, but with no buyer coming forward; a merger was considered, but not implemented. If PNB manages to sell its entire stake at the current market price, the net proceeds may amount to Rs 261 crore, not significant given PNB’s overall balance sheet size.

PNB Gilts is a primary market dealer in the debt market and derives income from investments, brokerage fees from trading in the primary and secondary markets, underwriting and also merchant banking services.

The company reported a net profit of Rs 45 crore for the full year ending March 31, 2008, but slipped into net losses of Rs 56 crore for the June quarter, due to losses on the bond portfolio.

Despite the loss, the stock has climbed on expectations of the stake sale.

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