The Hindu Business Line : SBI rights issue trades close to discounted price

Mumbai, March 17 The shares of State Bank of India on Monday traded close to the discounted price the bank is offering its rights issue, due to the general downturn in the stock market.

The largest bank in the country had priced its rights issue, announced last month, at Rs 1,590 a share.

The issue closes tomorrow.

On Monday, SBI shares closed at Rs 1,633, down 4.72 per cent from the previous close of Rs 1,714.35 on the BSE. Intra-day the stock fell to Rs 1,600.20.

When the issue was announced, the share price of SBI was Rs 2,462.25 and the rights issue was at a 35 per cent discount.

SBI is planning to issue about 10.5 crore shares to raise Rs 16,736.31 crore.

According to the bank officials, the issue has got ‘good’ response from individuals, who constitute about 6 per cent of the total shareholding.

“The individuals are the ones who apply in advance. Even among organisations who are shareholders, quite a few of them have put in money.

But the bigger investors are likely to apply tomorrow, which is the last day,” said a senior official from the bank.

However, market sources say that the response to the rights issue may not be as expected, given the slump in the stock market.

When asked about the fall in the share price since the announcement of the rights issue, the official said that the bank had anticipated about a 20 per cent decline price in the natural course.

“We had thought the price would touch roughly Rs 1,800 crore as the issue was spread over a month.

“But our bank’s inherent strength is seen in the fact that when the Bankex fell 9.06 per cent, and other banking stocks fell by around 10 per cent, our stock has fallen by about 5 per cent.”

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