HDFC Bank on Monday said its committee of directors has authorised the opening of its qualified institutional placement (QIP) and American Depository Receipt (ADR) to raise as much as Rs 15,500 crore.
HDFC Bank, the third most valued company after TCS and Reliance Industries, on Monday said its committee of directors has authorised the opening of its qualified institutional placement (QIP) and American Depository Receipt (ADR) to raise as much as Rs 15,500 crore. The lender, in an exchange filing, said each ADR represents three equity shares.
The committee has approved the floor price of Rs 2,179.13 per share for both the QIP and ADR. The HDFC Bank stock has been one of the best-performing stocks in the markets this year; the stock has gained 15.9% between now and January. The stock is trading at a price to book value of 5.14 of trailing 12-month earnings.
The lender posted a net profit of Rs 4,601.4 crore for the quarter ended June 2018. In a note to investors after the results, Citi said Q1FY19 PAT was 3% below its estimates and 4% below consensus.
“Margin decline of 10 bps q-o-q (to 4.2%) and mark-to-market loss on investments of `3.9 billion were partly offset by low opex growth of 11%. Loan growth was strong (+22% y-o-y) led by retail but CASA rose 14% y-o-y (Casa ratio down 180 bps q-o-q to 42%). Asset quality was healthy with gross NPA stable at 1.3% of loans though agri segment saw some stress,” the note said.
The note added that HDFC Bank has received capital of `85 billion from HDFC and plans to raise remaining `155 billion from other investors in the coming months. “The capital raise can add 240 bps to Tier 1 capital,” the note said.
Jefferies in its note said Net Interest Income (NII) growth trajectory weakened to a low point last witnessed in FY14, driven by 20 bps lower NIM (time deposits grew rapidly), offset by a reduction in the cost-to-asset ratio and higher fees.
However, analysts are bullish on the stock. Out of 53 analysts who track the stock on Bloomberg, 48 have a ‘buy’ rating, two have a sell rating and three have a ‘hold.’
In 2017, 43 companies raised `56,152 crore through QIPs. Banks and financial services companies constituted more than 3/4th of the total amount raised. State Bank of India, Kotak Mahindra Bank, Yes Bank, Federal Bank, DCB Bank and United Bank of India were the other banks that raised money through QIPs in 2017.
QIP is a capital raising tool wherein a listed company can issue equity shares, wholly and partly convertible debentures, or any security other than warrants that are convertible into equity shares.
But unlike in an IPO or an FPO, only institutions or qualified institutional buyers (QIBs) can participate.