Shares of India's second-largest private sector lender ICICI Bank gained almost 3% on Tuesday after the bank launched its Qualified Institutional Placement (QIP), setting the floor price at Rs 351.36 per equity share.
The floor price for qualified institutional placement of shares is at a discount of over 3% to Monday's close of Rs 363.60 on the BSE, as per the SEBI formula.
The equity offering by ICICI bank will be the fourth in the last two months, in which a slew of lenders including HDFC, Axis Bank and Kotak Mahindra Bank have raised capital. Meanwhile, IndiGo's parent company InterGlobe Aviation has also declared that it will raise up to Rs 4,000 crore through a qualified institutional placement (QIP).
On the equity front, ICICI Bank shares touched an intraday high of Rs 374.15, rising 2.9% on BSE, following the news. On Monday, ICICI Bank scrip closed at Rs 364.20 on BSE, up 1.75% from the previous close. The stock has risen 2.03% in the last 2 days. ICICI Bank shares have risen 1.54% in the last one month.
ICICI Bank stock price trades higher than 5, 20, 50 and 100-day but lower than 200-day moving averages. Market-cap of the private lender stood at Rs 2,36,871.65 crore as of today's session.
A decision on the final issue price and allotment will be taken on August 14. "A meeting of the issuance committee of Board of Directors of the Bank is scheduled to be held on Friday, August 14, 2020, to, inter alia, consider and determine the issue price for the equity shares to be allotted to qualified institutional buyers, pursuant to the Issue," ICICI Bank said in a press release.
On July 8, 2020, the private lender had made public its board's decision to raise up to Rs 15,000 crore in core capital through a variety of routes. Top local institutional investors that are also set to buy into ICICI Bank shares include SBI Mutual Fund, Aditya Birla, and Kotak Mahindra Mutual Fund. Bofa Securities, Morgan Stanley, JPMorgan, JM Financial, ICICI Securities and Citigroup are reportedly among the book runners to the issue.
Commenting on ICICI Bank- QIP, Jaikishan Parmar, Sr. Equity Research Analyst, Angel Broking said," We believe this fundraising in this environment would be positive for ICICI bank. At base price Tier I to increase approx. 200bps, net worth to gain 12.6%, and Book value to increase by 5.8%. In uncertain times adequate capital adequacy (CAR) will provide comfort to investors. Currently, ICICI bank trades 1.1x FY22E ABV which is a lower valuation compared to the historical average. Lower valuation, increase in CAR and healthy performance by Insurance and AMC Business would be positive for ICICI Bank."