P&S Bank IPO – Post review on 20th Dec

  • Punjab & Sind Bank IPO closed on Dec 16th with amazing strength – overall over-subscription 51 times with QIB 50 times, HNI 86 times and Retail 44 times !!
  • It exceeded all my expectations – looks like everyone has bet on the winning horse :-)
  • It will be a bit of a lottery if you get any shares. Also with minimum lot size at 50, retail cannot expect any more than this.
  • If they stick to the usual processing times, allotment may be around 26th and listing around 30th.
  • I feel the listing pop thereafter could beat CIL and MOIL as in banking stocks we are in familiar territory. Barring market abnormalities, it could be 60-80%.
  • Good luck with your investments !!

Also see IPO note – click link


Punjab and Sind Bank IPO – closes Dec16 for Retail

Investment Note


  • Punjab & Sind Bank has a good network – 926 branches in North/ Central India
  • The IPO pricing of Rs 113-120 per share will help firm raise Rs 452-480 crores
  • The primary purpose is to fund growth plans and shore up capital adequacy
  • Government shareholding will fall to 82% post IPO


  • 5% Retail discount; Attractively priced compared to PSU peers, with P/E multiple of 4.56-4.84, and P/B value of 1.12
  • CAGR of 38% in business over 06-10 with advances + deposits at Rs. 88k crores
  • Gross NPA ratio is falling, and is currently at 0.92%, favorable compared to peers; Conservative in NPA provisioning
  • Also there has been a 24% CAGR in earnings
  • Over 8000 employees, but still it has high productivity of Rs 9.6 crore/ employee
  • Quality partners – Tie-ups with Aviva (for life), Bajaj Allianz (general insurance) and UTI MF (distribution of MF product) should shore up its fee-based income.

Negatives/ Challenges

  • Low CASA at 25%, resulting in lower Net interest margins (NIM) at 2.67 for FY-10. Hence now firm is focused on branch and deposits growth.
  • Lack of clarity on appointment of new CMD – typical problem of PSU firms
  • Slow technology up-gradation
  • Presence in limited geographies – however in these areas, there is a high consumer recall/ brand strength

Outlook, IPO status and Investment Advice

  • While not large, P&S Bank is likely to grow faster and more profitably than the sector for a few years. Thereafter who knows, a M&A maybe?
  • On Day 1, 13th Dec, the issue has been oversubscribed 1.58 times – surprising strength, with QIB (2.94 times), HNI (0.18 times) and Retail (0.40 times).
  • Looks like even the recent steep fall in Indices has not dampened the appetite for attractively priced government offerings :-)
  • Watch subscription figures of IPO till 15th Dec to set expectations for allotments
  • For firm allotment in Retail, invest in 1650 shares at cut off (120) – a total investment of 1,98,000.

Also see post closure note of this IPO – click link