United Bank makes its debut with 4% premium

19 Mar 2010, 0111 hrs IST,
SourceET Bureau


MUMBAI: Shares of state-owned United Bank makes its debut with 4% premium

(UBI) listed on Thursday on local stock exchanges 

at a modest premium to its issue price,
underscoring investor sensitivity to valuations.

The stock listed at Rs 77, but surrendered most of its gains
to close at Rs 68.10, up 4.2% over its issue price of Rs 66.
Dealers tracking the stock said it was fairly valued at the issue price.
The counter attracted combined volumes of 8.3 crore shares on BSE
and NSE, which account for 26% of the bank’s post-IPO equity.

Intra-day, players were active in the stock, which was also reflected
in low delivery-based volumes in the counter.
Only 19% of the total traded quantity resulted in actual
delivery on BSE on Thursday.

The bank reported a net interest margin of 2.07% for the
December quarter, which is low compared to its peers with a
similar current account savings account ratio of 34%.
“Since we are repricing some of incremental SMEs, mid-corporate
loans at higher yields, I expect NIM to improve,” said Bhaskar Sen,
CMD of United Bank of India.

“The stock looks adequately valued at the current level.
Any further upside would depend on the management’s
growth strategy and also on fundamental factors like RoE and RoA,”
said an analyst with a Mumbai-based broking firm.

UBI had offered five crore shares in the price band of Rs 60-66 per
share to raise Rs 330 crore from the public. It had also offered a 5% discount
to retail subscribers. The issue received the overall subscription of 33.4 times,
while the retail portion was subscribed 8.4 times.

The bank plans to use the proceeds to enhance its capital base
so that it would be able meet its future capital requirements.