Have all approvals for QIP; need to raise Rs 900cr: IOB
Speaking to CNBC-TV18, M Narendra, chairman, Indian Overseas Bank says that bank requires Rs 2100 crore capital and with the government giving it Rs.1200 crore, it will need to raise less than Rs 900 crore from QIPs.
Speaking to CNBC-TV18, Narendra says that bank requires Rs.2100 crore capital and with the government giving it Rs 1200 crore, it will need to raise less than Rs 900 crore from QIPs
Additionally, Narendra says that the bank has already received all the approvals for the same. “We had already got these approvals in the board. Now we will only have to discuss government placement and preferential allotment in the Extraordinary General Meeting (EGM). Other than that, approvals for overall capital raising are already there with us. Through our last AGM we have taken all the necessary approvals. So, that will not be difficult. Parallelly, according to the right time we may look at the other options too,” he adds.
Below is the edited transcript to CNBC-TV18.
Q: Have you heard anything decisive from the government and what would Indian Overseas Bank's ( IOB ) requirement be in terms of capital infusion?
A: Yesterday there were discussions. The equity infusion is a very encouraging sign. The coming funds will help the bank also in terms of the future credit growth. Our requirement at the rate of around 14 percent credit growth maybe around Rs 2,100 crore taking into account a certain level of profit plough back. So, to that extent, we may look at other alternative options by private placement or Qualified Institutional Placement (QIP) and we will decide timing of that appropriately.
Q: So if you all have to do a QIP it would be for the balance of Rs 2,100 crore minus whatever the government gives you. So if it is Rs 1,200 crore, it will be Rs 900 crore.
A: Yes, depending upon our requirement, it maybe slightly lower. Rs 2,100 crore was estimated earlier. Now Rs 1,200 crore is coming. So, we may look at what extent we should go for private placement or QIP.
Q: How soon will you all take a decision on whether you will do this private placement? When is the next board meeting etc.?
A: We had already got these approvals in the board. Now we will only have to discuss government placement and preferential allotment in the Extraordinary General Meeting (EGM). Other than that, approvals for overall capital raising are already there with us. Through our last AGM we have taken all the necessary approvals. So, that will not be difficult. Parallelly, according to the right time we may look at the other options too.
On October 23, 2013, Indian Overseas Bank closed at Rs 49.85, down Rs 0.5, or 0.99 percent. The 52-week high of the share was Rs 94.85 and the 52-week low was Rs 37.15.
The company's trailing 12-month (TTM) EPS was at Rs 4.97 per share as per the quarter ended June 2013. The stock's price-to-earnings (P/E) ratio was 10.03. The latest book value of the company is Rs 145.63 per share. At current value, the price-to-book value of the company was 0.34.
