Multibagger Union Bank shares gain nearly 5% after PSU lender launches QIP
The shares of Union Bank of India that are in line with the run-up in the Nifty PSU Bank have scaled by a sharp over 100 per cent in the last one year. Nifty PSU Bank, meanwhile, has galloped 88 per cent during the same time.
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11:00 AM IST
Union Bank shares in Wednesday's trade were in the green after the public-run lender announced the launch of the Qualified Insitutional Placement (QIP) for mopping up to Rs 3000 crore.
At the open, shares of the company climbed as much as 4.89 per cent to the day's high of Rs 148.
The floor price for the placement is pegged at Rs 142.78 per share, i.e., a premium of 1.19 per cent to the previous closing price. The issue for the QIP was launched on February 20.
"We wish to inform you that a meeting of the Committee of Directors for Raising Capital Funds is scheduled to be held on February 23, 2024, to, inter alia, consider and approve the issue price, including a discount, if any thereto as permitted under the SEBI ICDR Regulations, for the Equity Shares to be allotted to Qualified Institutional Buyers, pursuant to the issue," said the lender's filing with the exchanges.
"Pursuant to the SEBI ICDR Regulations, the Bank may offer a discount of not more than 5% on the Floor Price so calculated for the Issue," added the filing.
The shares of Union Bank in line with the run-up in the Nifty PSU Bank have scaled by a sharp over 100 per cent in the last one year. Nifty PSU Bank, meanwhile, has galloped 88 per cent during the same time.
Bank Nifty is just shy of logging its all-time high, and amid this, experts see good traction in the banking pack.
The bank commands low price to earnings, which is lower than the industry average, signalling cheap valuations.
The consensus estimate for the stock from 9 analysts is a buy for the stock, with 5 of them signalling a strong buy for the counter.
Motilal Oswal Financial Services (MoFSL) in its report dated February 8 has iterated its 'buy' view with a target of Rs 165."With earnings driven by healthy revenue, loan growth, and controlled provisions, fresh slippages have been moderating, which, coupled with healthy recoveries and upgrades, have resulted in an improvement in asset quality ratios. Further, a low SMA book and controlled restructuring provide a better outlook on asset quality, noted MoFSL.
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