F&O Insights: Aug expiry, RIL AGM to guide Nifty; India Cements exit today

by Hansraj Agrawal | Aug 29, 2024 | Share Market

F&O Outlook for August 29: The Nifty scaled a new high at 25,130 and ended higher for the 10th straight trading session on Wednesday backed by strong domestic flows. On Thursday, the monthly futures & options expiry, global market trends and announcements from index heavyweight – Reliance Industries shall guide the Nifty trend.

The Reliance AGM is scheduled at 2 PM, and the stock being an index heavyweight is likely to impact the trend on the Sensex and Nifty today. Here are the key levels to watch out for Reliance stock.

Meanwhile, the Nifty September futures gained 0.1 per cent yesterday to settle at 25,162, a premium of 110 points as against the spot Nifty close of 25,052. The premium dipped by 6-odd points on a day-to-day basis. The open interest (OI) rose by 48.9 per cent, with an addition of 1.15 lakh contracts largely on account of FIIs buying.

Technically, the Nifty on a daily scale has formed a spinning top candlestick pattern. As per this pattern, as long as the index remains below 25,130 short term consolidation or profit taking could be possible, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates in a note.

However, if the Nifty sustains above the 25,130 levels, then this pattern will be negated and the rally could extend towards the 25,300-25,500 levels. On the downside, the 9-Day Exponential Moving Average (DEMA), positioned near 24,820, will act as immediate support for the Nifty in the short term, the analyst added.

On Wednesday, the Bank Nifty September futures declined 0.2 per cent to 51,429, while the premium rose from Rs 257 to Rs 284 per contract. Amid the ongoing rollovers, a total of 58,588 fresh contracts were added to the OI.

Key Insights from Nifty, Bank Nifty Options data:

The Nifty options market remains bullish, with more Puts being written than Calls as the index continues to hold above the 25,000 level. Significant open interest at the 25,000 Put (1.19 crore contracts) and the 25,500 Call (91.12 lakh contracts) points to a narrow range battle between buyers and sellers, said Dhupesh Dhameja, Technical Analyst at SAMCO Securities in a note.

The Put-Call Ratio (PCR) has slightly increased from 1.11 to 1.12, underscoring the bullish structure dominated by Put writers over the past two trading days. The Max Pain Point at 25,000 strike marks a critical level that could influence the Nifty’s near-term movement.

In case of Bank Nifty, significant open interest is noted at the 51,200 Call (1.09 crore contracts) and the 51,100 Put (1.22 crore contracts), with active trading around the 51,300-51,400 Calls and 50,900-51,000 Puts.

The Put-Call Ratio (PCR) has slightly increased from 0.84 to 0.89, reflecting a sideways to bearish sentiment as the index experiences limited follow-up buying and trades mostly sideways, keeping the bulls cautious. The Max Pain Point, concentrated at 51,200 strike, serves as a crucial level to watch, for the potential shifts in the index’s direction, the note added.

FII, DII trading activity in F&O – Here’s all you need to know about who bought and who sold in the derivatives market on August 28?

As per data from the NSE, FIIs net bought 33,855 contracts of index futures on August 28 for a consideration of Rs 2,102.82 crore. FIIs net bought 36,472 contracts of Nifty futures, while sold 2,169 contracts of Bank Nifty futures and 502 contracts of MidCap Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures jumped to 1.6:1 – this ratio implies that foreign investors now hold more than 3 long positions in index futures for every 2 bets on the short side of trade. The FIIs longs in index futures stood at 61.52 per cent.

Meanwhile, domestic institutional investors (DIIs) too raised their long positions marginally – DIIs index futures long-short ratio rose to 0.59:1; with net longs at 37.37 per cent.

On the other hand, retail traders’ long-short ratio dipped below 1 to 0.86, thus implying retail traders held more than 1 short position for every long trade in index futures as of yesterday.

Bullish & Bearish stocks

Over the last three trading sessions, LTIMindtree, Indian Energy Exchange (IEX), Cholamandalam Investment and Finance Company and National Aluminium have seen the strongest gains in the F&O space.

IndiaMart Intermesh, Sun TV, RECL, Lupin and Power Finance Corporation (PFC) have been the other bullish stocks, up around 3 per cent.

On the flip side, Ambuja Cements has been a key laggard, down 3.5 per cent in the last three days. Hindustan Aeronautics, Bandhan Bank, Federal Bank, Cummins India, Bharat Electronics, Marico, Coal India, Container Corporation, Canara Bank, Britannia and Adani Enterprises have been the other bearish stocks, down 2-3 per cent each.

Stocks in F&O ban period today

Only 4 out of the 181 derivatives stocks traded in the August series were placed in the F&O ban period for Thursday.

Bandhan Bank, Granules India, Hindustan Copper and India Cements were the 4 stocks in F&O ban today. India Cement will be removed from the F&O list at the end of the trading session on Thursday.

First Published: Aug 29 2024 | 9:23 AM IST

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Stocks to Watch: RIL, IndiGo, PB Fintech, Tata Steel, Paytm, KEC Int'l

by Hansraj Agrawal | Aug 29, 2024 | Share Market

Stocks to Watch: The Indian benchmark indices BSE Sensex and Nifty 50 were headed for a slow start, as indicated by the GIGT Nifty index, after Nvidia’s better-than-expected results failed to boost investors’ confidence in the US market and the company’s stock fell nearly 7 per cent, in extended trading.

At 7:50, GIFT Nifty was trading at 25,003.50, around 45 points behind Nifty futures close at 25,048.35.

Meanwhile, Asia-Pacific markets fell on Thursday, with tech stocks dragging South Korean and Taiwanese indexes after Nvidia’ second-quarter results.

South Korean chip heavyweight SK Hynix plunged over 5 per cent, while Samsung Electronics fell more than 2.6 per cent, dragging the Kospi down 0.71 per cent.

The Taiwan Weighted Index lost 1.14 per cent, leading losses in Asia.

Japan’s Nikkei 225 dropped 0.42 per cent, while the broad based Topix was down 0.24 per cent.

Australia’s S&P/ASX 200 was down 0.67 per cent, while Hong Kong Hang Seng index slipped 0.4 per cent, and the mainland Chinese CSI 300 lost 0.31 per cent.

Meanwhile, here are a few stocks likely to be in focus on Thursday, August 29:

Reliance Industries: The Competition Commission of India (CCI) has approved the merger between Reliance Industries-promoted Viacom18 and Walt Disney-owned Star India. This landmark merger is set to create India’s largest media and entertainment firm, with Reliance holding a 56 per cent stake, Disney owning 37 per cent, and Bodhi Tree Systems having 7 per cent. That apart, the company is also holding its AGM for FY24, today.

IndiGo: Rakesh Gangwal, co-founder of InterGlobe Aviation (which operates IndiGo), plans to sell up to $850 million worth of his stake in the country’s largest airline through block deals. The indicative price for the stake is set at Rs 4,593 per share, reflecting a 5.5 per cent discount to the current market price.

PB Fintech: Tencent Cloud Europe BV is likely to offload a 2.1 per cent stake (approximately 9.7 million shares) in PolicyBazaar’s promoter through block deals. The floor price for this transaction is set at Rs 1,660.2 per share, representing a 4.5 per cent discount to the current market price.

Procter & Gamble Hygiene and Health Care: The company recorded a net profit of Rs 81.06 crore for the quarter ended June 2024, a decline of 46.4 per cent compared to the year-ago period. However, revenue grew by 9.3 per cent year-on-year to Rs 931.8 crore during the quarter. The board recommended a final dividend of Rs 95 per share.

Vedanta: Anil Agarwal-owned mining conglomerate Vedanta will consider a third interim dividend at its board meeting on September 2. The record date for the dividend has been fixed as September 10, 2024.

Tata Steel: The company has acquired 178.34 crore ordinary equity shares worth $280 million (Rs 2,347.81 crore) in T Steel Holdings Pte (TSHP). Post this acquisition, TSHP will continue to be a wholly owned subsidiary of the company.

KEC International: Infrastructure company KEC International has won new orders worth Rs 1,171 crore in its Transmission and Distribution business, including constructing transmission lines in the UAE and Saudi Arabia.

One 97 Communications: Paytm Payments Services (PPSL) has received Finance Ministry’s approval for ‘downstream investment’ from One 97 Communications. PPSL, a wholly owned subsidiary of One 97 Communications, will now resubmit its payment aggregator (PA) application. Paytm emphasizes its ‘compliance-first approach’ and commitment to advancing the Indian financial ecosystem12.

Zomato: Zomato has acquired Paytm’s entertainment ticketing business for Rs 2,048 crore to strengthen its “going-out” segment. The deal includes Orbgen Technologies Pvt Ltd (OTPL) for movie ticketing and Wasteland Entertainment Pvt Ltd for events ticketing.

LTIMindtree: The Karnataka High Court has stayed a tax order worth Rs 378 crore against LTIMindtree for alleged non-payment of Integrated Goods and Services Tax.

YES Bank: The bank collaborates with Newtap Finance to provide personalized financing solutions for creditworthy individuals on payments platform CRED. CRED members will benefit from competitive rates and a superior digital-first experience5.

Sonata Software: The company has secured a multi-million dollar IT outsourcing contract from a US-based premier healthcare and wellness company. The collaboration focuses on optimizing IT budgets and modernizing technology landscape.

Wipro: The global IT services provider, has announced the liquidation of Capco Consulting Services (Guangzhou), its step-down subsidiary based in China. Additionally, the company has completed its subscription in the equity share capital of Huoban Energy.

Macrotech Developers: The realty firm plans to acquire 100 per cent equity stakes in Opexefi Services Private Ltd and One Box Warehouse Private Ltd through executed Share Purchase Agreements. The acquisitions, valued at Rs 46.7 crore and Rs 49 crore, respectively, will make both companies wholly owned subsidiaries of Macrotech.

NLC India: State-owned NLC India has signed a 25-year power usage agreement with Telangana state discoms for 200 MW of solar energy under the central public sector undertaking scheme.

Vodafone Idea: The Supreme Court of India has scheduled a hearing for Vodafone Idea’s curative petition in the Adjusted Gross Revenue (AGR) case on August 30. This follows the Supreme Court’s acknowledgment of Vodafone Idea’s submission against the 2019 judgment on payments to the government.

VLS Finance: The company announced a share buyback program, intending to repurchase up to 33 lakh fully paid-up equity shares at a price of Rs 380 per share, totaling Rs 125.4 crore.

Lemon Tree Hotels: The company announced its newest property, Lemon Tree Hotel in Ujjain, Madhya Pradesh. The hotel, expected to open in FY27, will feature 72 rooms, a restaurant, a bar, a swimming pool, and other public areas. It will be managed by Carnation Hotels, a wholly-owned subsidiary of Lemon Tree Hotels.

NALCO, Oil India: Khanij Bidesh India Ltd. (KABIL), a joint venture among NALCO, Hindustan Copper, and Mineral Exploration & Consultancy, has signed an MoU with Oil India for collaboration in mineral exploration and related projects. This partnership aims to address India’s growing needs for mineral resources.

Welspun Living: The promoter of Welspun Living plans to sell up to 4.6 per cent of the company’s stake and raise $106 million. The transaction will be executed at a floor price of Rs 197 per share, representing about a 5 per cent discount to the current market price.

TCNS Clothing Company: Religare Invesco Mutual Fund, Edelweiss Mutual Fund – Edelweiss Absolute Return Fund, and Invesco Mutual Fund bought a 3.2 per cent stake in the women’s apparel company. Setu Securities, Morgan Stanley Asia Singapore Pte, and Nomura Singapore sold 3 per cent of shares in the company.

Kesoram Industries: Foreign portfolio investor SG Sundae Holdings LLC sold 0.92 per cent of shares at an average price of Rs 207.02 per share.

Shaily Engineering Plastics: Motilal Oswal Mutual Fund bought an additional 0.68 per cent stake at an average price of Rs 923.63 per share. Also, they acquired 1.09 per cent of shares at an average price of Rs 940 per share.

Annapurna Swadisht: Annapurna Swadisht has opened its qualified institutions placement (QIP) issue on August 28, with an approved floor price of Rs 434.96 per share.

Gulshan Polyols: PGIM India Equity Growth Opportunities Fund Series I purchased a 0.8 per cent stake at an average price of Rs 216.75 per share.

CIL Nova Petrochemicals: Legends Global Opportunities (Singapore) Pte bought a 4.6 per cent stake at an average price of Rs 69.74 per share from New Leaina Investments. Additionally, Albula Investment Fund purchased a 4.7 per cent stake at an average price of Rs 70.5 per share from Lotus Global Investments.

PDS: The company has successfully completes a QIP to raise Rs 430 crore. The funds will accelerate growth, diversify sourcing regions, and expand global footprint9.

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Stock Market LIVE Updates: Sensex, Nifty headed for slow start after Nvidia's results; RIL AGM eyed

by Hansraj Agrawal | Aug 29, 2024 | Share Market

Stock Market LIVE Updates, Thursday, August 29, 2024: The Indian benchmark indices BSE Sensex and Nifty 50 were likely to start on a muted note, as indicated by the GIFT Nifty index, tracking weakness in the overnight US market following Nvidia’s results.

At 6:45 am, the GIFT Nifty was trading at 25,005.50, around 40 points behind Nifty futures’ close at 25,048.35. Meanwhile, investors in the domestic market would also have their eyes peeled for the Mukesh Ambani-led Reliance Industries Annual General Meeting, scheduled for today afternoon.

Global equity markets eased while the US dollar rebounded on Wednesday. However, chipmaker Nvidia’s better-than-expected results failed to impress some investors and the company’s stock fell 7 per cent in extended trading.

Wall Street’s main indexes finished lower. The Dow Jones Industrial Average fell 0.39 per cent to 41,091.42, the S&P 500 lost 0.60 per cent to 5,592.18 and the Nasdaq Composite lost 1.12 per cent to 17,556.03.

Europe’s benchmark STOXX index climbed 0.33 per cent while Japanese stocks closed 0.22 per cent higher. MSCI’s gauge of all stocks across the globe was 0.42 per cent lower at 827.32.

Nvidia’s third-quarter revenue forecast of $32.5 billion surpassed Wall Street estimates after markets closed. The report still failed to impress the most bullish investors who have driven a dizzying rally in its shares as they bet billions on the future of generative artificial intelligence. Shares of the Santa Clara, California-based company fell 3 per cent in extended trading.

Asia-Pacific markets fell on Thursday, tracking losses on Wall Street as investors assess results from tech giant Nvidia.

Investors in Asia will watch for any spillover to tech stocks in the region, which is home to companies along Nvidia’s value chain like Taiwan Semiconductor Manufacturing Company and SK Hynix.

South Korean chip heavyweight SK Hynix plunged 6% on its open, while Samsung Electronics fell more than 3 per cent, dragging the Kospi down 1.3 per cent. The small-cap Kosdaq was down 0.55 per cent.

Japan’s Nikkei 225 dropped 0.56 per cent, while the broad based Topix was down 0.14 per cent. Australia’s S&P/ASX 200 was down 0.47 per cent.

Hong Kong Hang Seng index futures were at 17,648, lower than the HSI’s last close of 17,692.45.

A preliminary estimate of second quarter US gross domestic product is due on Thursday. The Fed’s preferred inflation measure – the core personal consumption expenditures (PCE) index – will be released on Friday.

Markets, which are fully priced for a 25 basis point US interest rate cut next month, see just over 100 basis points of easing by the end of the year.

Gold prices were hurt by the stronger US dollar with spot gold lost 0.68 per cent to $2,507.50 an ounce, and US gold futures settled 0.6 per cent lower at $2,537.80.

Oil prices fell on concerns about Chinese demand and risks of a broader slowdown. Brent crude futures settled down 1.13 per cent at $78.65 a barrel. US West Texas Intermediate crude futures fell 1.34 per cent to $74.52.

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Unlocking shareholder value through demergers, boosting profitability

by Hansraj Agrawal | Aug 28, 2024 | Share Market

6 min read Last Updated : Aug 28 2024 | 11:52 PM IST

In the lifespan of a typical business, companies often start as single entities, focusing on one primary product or service. As they grow, they may diversify into additional ventures, which start as small units managed within the existing corporate structure to minimise administrative costs and complexity. However, as businesses expand, they often reach a point where their operations, financial performance, and market conditions make it essential and beneficial (from a tax and growth perspective) for stakeholders to demerge them into separate legal structures. This is often done through corporate actions such as spinoffs, divestitures, hive-offs, or equity carve-outs, also known in common parlance simply as a ‘demerger’. It provides several benefits, including greater shareholder value, operational efficiency, and sectoral specialisation.

As companies grow, their diversification strategies play a critical role in shaping their future. Over time, businesses gain substantial market share, develop independent brands, and contribute significantly to the company’s overall revenue. When these business units become large enough, maintaining them under one corporate structure can create challenges such as capital allocation asymmetries. At this stage, companies therefore consider demerging businesses to allow each unit to thrive independently and deliver more shareholder value.

Dhanendra Kumar, Chairman of Competition Advisory Services India LLP

Why Companies Demerge?

One of the key reasons for demergers is the recognition that different business units may have distinct strategic needs. Indian companies across sectors—from pharmaceuticals to infrastructure—are increasingly adopting demergers as a strategic move to unlock shareholder value. The rationale behind demergers is to create focused entities, each with its own strategic direction, better resource allocation, improved management oversight, and, ultimately, higher profitability.

According to a Deloitte study, large-scale consolidations and corporate restructurings have been the primary drivers of strategic deal volume in the financial services (FS) sector. Such transactions accounted for 90 per cent of the overall deal value in the FS sector in 2022 and 59 per cent in 2023, underscoring the growing importance of demergers as a tool for unlocking shareholder value.

For instance, Reliance Industries, a conglomerate with interests ranging from petrochemicals to retail, decided to demerge its financial services business in 2023. This allowed the demerged unit to focus on its own growth trajectory, attract dedicated investors, and operate under a regulatory framework more suited to its industry. Larsen & Toubro (L&T), a diversified conglomerate, has also undertaken several demergers to streamline its operations.

Take the example of Raymond Limited, a diversified group with interests in textiles, apparel, consumer care, realty, and other sectors. The company has proposed a demerger with the objective of unlocking value for shareholders through the creation of sector-focused entities. Under the scheme, the listed entity—Raymond Ltd—will demerge its lifestyle business into Raymond Lifestyle Ltd (RLL), offering investors a choice to invest in a pure-play lifestyle company, counted amongst the top players in this segment globally. Investors will also get exposure to its wedding business, which is a unique proposition in India in terms of its target addressable market. The demerger also involves the amalgamation of Raymond’s consumer trading arm with RLL, creating more focused entities. Considering India’s focus on boosting domestic consumption, reducing imports, and expanding the GDP beyond $5 trillion, the demerged entities will be better placed to cater to separate markets.

Mining major Vedanta Limited is also on track with its demerger plans that will result in the creation of six independent “pure play” companies once the demerger is approved by stakeholders. Under Vedanta’s proposed demerger scheme, shareholders holding one share of Vedanta Limited will additionally receive one share of each of the five newly listed companies. The company’s demerger rationale is that each independent entity will have greater freedom to grow to its potential via an independent management, capital allocation, and niche growth strategies. Vedanta’s demerger will also simplify the corporate structure and create sector-focused independent businesses that will provide investment opportunities to Indian and global investors.

Unlocking Shareholder Value

Demergers are also driven by the need to enhance shareholder value. When a company is diversified across unrelated industries, its stock price may not fully reflect the value of its individual business units, something also known as the conglomerate curse. By demerging, the company can create separate entities that are easier for investors to evaluate, leading to long-term value. For instance, throughout more than eight decades of its existence, the original Hewlett-Packard Company (HP) demerged or spun off businesses at various junctures. In 2000, it completed the separation of its medical, analytical, and semiconductor businesses, leading to the creation of Agilent Technologies. Conglomerates like General Electric, DuPont, United Technologies, and others have also undergone similar exercises.

Demerging allows each business to cater to its specific sector, derive benefits from various growth cycles, and maintain exclusive focus. In the case of Raymond, the demerged businesses catering to lifestyle and other sectors will help attract investors with matching knowledge and appetite. Similarly, Vedanta’s demerged businesses will individually focus on their respective sectors—aluminium, oil and gas, power, base metals, and steel and ferrous metals. As sectors have their ups and downs, the separation of businesses will provide adequate exposure.

In today’s dynamic corporate environment, where agility and focus are crucial, demergers have proven to be a potent tool for Indian as well as global companies seeking to enhance shareholder value. By allowing companies to concentrate on their core competencies and create more focused business entities, demergers facilitate better management, improved operational efficiency, and increased profitability. As India Inc. continues to embrace this strategy, shareholders stand to benefit from the significant value unlocked through these carefully executed restructuring processes. Far from being a passing trend, the surge in demergers reflects a strategic evolution that aligns with the needs of modern businesses and their stakeholders, ensuring sustained growth and profitability in a competitive market.

(Dhanendra Kumar is the First Chairman of CCI, former Executive Director at World Bank for India, Sri Lanka, Bangladesh and Bhutan, and Secy. GoI. He is currently Chairman of Competition Advisory Services India LLP)

Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

First Published: Aug 28 2024 | 11:43 PM IST

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Sebi proposes mandatory UPI block secondary market for larger brokers

by Hansraj Agrawal | Aug 28, 2024 | Share Market

2 min read Last Updated : Aug 28 2024 | 9:30 PM IST

The Securities and Exchange Board of India (Sebi) plans to mandate the UPI block mechanism, also known as the ASBA-like facility, in the secondary market for Qualified Stock Brokers (QSBs).

QSBs are brokers with larger client sizes and thus more significance in the market ecosystem. Till now, the facility is mandatory only in the primary market (IPOs) and is currently optional for brokers to provide in the secondary market from January 2024.

In a consultation paper floated on Wednesday, the market regulator said that the mechanism may eventually become a popular method for retail investors to trade in the securities markets, provided that trading members (TMs) are willing to adopt the system.

“Significant progress was made in the said meetings with the support of the stakeholders. Some of the notable developments include the issuance of letters to banks urging them to participate in providing the facility of the UPI block mechanism to clients, the issue of a circular by NPCI dated July 31, 2024, with respect to the enablement of the UPI mandate feature of single block multiple debits, and facilitation by developing certain file formats by clearing corporations (CCs) required by TMs for back-office reconciliation,” said Sebi.

Under the block mechanism, the amount is not deducted from the bank account unless the transaction takes place.

Sebi has also indicated that if the UPI block mechanism is later extended to the derivatives segment, it would result in additional benefits for the clients as well as banks.

“This would result in significant savings for the clients in the form of interest accrual on cash balances and create a steady stream of low-cost current account savings account (CASA) balances for the banks,” noted Sebi.

First Published: Aug 28 2024 | 9:21 PM IST

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Regional Rural Banks evince interest in going public at meet with FM

by Hansraj Agrawal | Aug 28, 2024 | Share Market

3 min read Last Updated : Aug 28 2024 | 9:13 PM IST

Buoyed up by their strong performance, some of the Regional Rural Banks (RRBs) have expressed willingness to go for initial public offerings (IPOs) during their discussion with Finance Minister Nirmala Sitharaman last week.

“In the meeting that happened on August 19, there was some discussion related to market opportunities for RRBs. Some sponsor banks said that a few RRBs are performing so well that they can go to the market for fundraising,” said a senior person in the finance ministry.

The meeting, chaired by Sitharaman, was attended by Department of Financial Services (DFS) secretary-designate M Nagaraju, the department’s additional secretary and other senior officials; representatives from the Reserve Bank of India (RBI), Small Industries Development Bank of India (Sidbi), and National Bank for Agriculture and Rural Development (Nabard); chairpersons of RRBs; and chief executive officers (CEOs) of sponsor banks.

“Out of the total nine RRBs, seven are performing exceptionally well, particularly Prathama UP Gramin Bank and Punjab Gramin Bank. We are considering a public issue for Prathama RRB,” Managing Director and CEO of Punjab National Bank (PNB) Atul Kumar Goel told Business Standard.

The Moradabad-based Prathama RRB was established in 2019 through the amalgamation of two RRBs — Sarva UP Gramin Bank Meerut and Prathama Gramin Bank Moradabad. The bank operates 967 branches across 20 districts of UP — Bulandshahar, Ghaziabad, Meerut, Gautam Budh Nagar, Hapur, Baghpat, Shamli, Saharanpur, Muzaffarnagar, Bijnor, Haridwar, Gonda, Balrampur, Sambhal, Budaun, Jhansi, Lalitpur, Moradabad, Rampur and Amroha.

According to the finance ministry’s draft guidelines of 2022, RRBs with a minimum net worth of Rs 300 crore must also have a capital adequacy ratio above the regulatory minimum level of 9 per cent in each of the preceding three years.

Additionally, these regional lenders must have reported an operating profit before tax of Rs 15 crore in three out of preceding five years. The identified RRBs must also have a return on equity (RoE) of 10 per cent and a return on assets (RoA) of 0.5 per cent in three out of five preceding years.

Furthermore, any lender must not be under the RBI’s prompt corrective action (PCA) framework.

“Through the IPO, we aim to enhance our credibility as a prestigious organization to be part of and worth investing in,” said a senior executive of the RRB.

Krishnan Sankarasubramaniam, former MD & CEO of Punjab & Sind Bank, said: “If RRBs go for IPOs, it will increase accountability to the public and enable them to operate more professionally by acquiring additional funds.”

First Published: Aug 28 2024 | 9:13 PM IST

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