NRI Dunia
Think Outside The Box

Five of 12 PSU bank stocks trade near face value

Five out of 12 public sector banks are trading near the face value of their equity shares on bourses regardless of a rally in stock benchmark indices, according to an analysis.

Shares of state-run Indian Overseas Bank are even trading below the face value of Rs 10 per share. On the BSE, the stock closed at Rs 9.27 on Friday when the benchmark index Sensex closed at 40,509.

The Chennai-based bank tapped the market first in September 2000 offloading part of the government’s stake at par or at the face value of Rs 10 per share.

Remaining four public sector banks of Bank of Maharashtra, UCO Bank, Punjab & Sind Bank and Central Bank of India are trading near the face value of Rs 10 per share.

Shares of Punjab & Sind Bank closed at Rs 10.81 per unit, Bank of Maharashtra’s at 11.29 per unit on Friday.

Mumbai-based Central Bank of India is slightly better positioned with closing price of Rs 12.45 per share followed by Kolkata-based UCO Bank at 12.14 per unit.

Religare Broking Ltd Chief Operating Officer Gurpreet Sidana said, “We’ve witnessed a remarkable recovery in the benchmark in the last few months but the PSU banking pack is still struggling. After the initial rebound, mostly PSU banking stocks are again hovering closer to their 52-week lows.”

There are multiple overhangs on the sectors including asset quality concerns, subdued business environment and low credit offtake causing deterioration in stock prices, he said.

All these issues put together are weighing on stock price of the PSU banks and even the biggest name on the list, SBI, is not spared as it’s currently quoting less than the sum total of value of its subsidiaries, Sidana explained.

One of the reasons for low interest of investors in these stocks is limited free float, an analyst said, adding that most of the banks have government holding of over 90 per cent leaving little number of shares for the public to trade.

The government holding in Indian Overseas Bank is at the highest level of 95.84 per cent followed by UCO Bank at 94.44 per cent, Bank of Maharashtra at 93.33 per cent and Central Bank of India at 92.39 per cent.