New Delhi, Aug 2: It seems to be a long wait for the investors in the IDBI Bank IPO. Despite a 131 per cent spurt in net profit of IDBI Bank, the investors did not get an exit opportunity in the stock. In anticipation of the the first quarter results, the stock has risen by 9.8 per cent in nine trading sessions on the Bombay Stock Exchange. However, on Monday, a day after the result announcements, the stock remained at the Friday-level of Rs 15.1. The day was marked by a spurt in trading volumes of 39,000 shares. During the day, the scrip touched a high of Rs 15.9 and some selling saw the stock closing at Rs 15.1. Perhaps, the spurt in net profit in the back of a 97.8 per cent jump in other income triggered the selling at this counter. So, the market expects that the bank may not be able to sustain this performance in the second quarter.The bank has managed an impressive performance for the first quarter of the current fiscal despite the fact that some of the other banks reported a fall in their net profit. Net profit zoomed from Rs 4.09 crore in the three-month period ended June 30, 1998 to Rs 9.46 crore for the first quarter of the current fiscal, thanks to the jump in other income from Rs 5.53 crore to Rs 10.94 crore.
Interest income rose by 38.7 per cent from Rs 60.72 crore to Rs 84.22 crore. Operating profit (excluding other income) is up by only 5.48 per cent. The spurt in net profit is also due to a 5.5 per cent fall in provisions and contingencies. Total income of Rs 95.16 crore is understated to the effect that the bank did not include dividends on its investments of Rs 154.25 crore.
Total advances of the bank rose by 32.25 per cent from Rs 843.99 crore to Rs 1118.42 crore. Total deposits rose by 47.5 per cent from Rs 843.99 crore to Rs 2,977.95 crore.
As the bank saw a major growth in deposits, in the absence of a similar growth in advances, it increased its exposure to non-lending activities (including investments in shares and debt instruments). As a result, credit substitutes zoomed by 160 per cent from Rs 230.25 crore to Rs 598.37 crore. After IDBI Bank's listing, the stock never crossed the offer price of Rs 18. On an expanded equity base of Rs 140 crore, the annualised EPS works out to Rs 2.7.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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