Nepal Grameen Bikas Bank to earn Rs 3.55 crore premium from RMDC promoter shares auction; EPS to grow by almost 17%

Nepal Grameen Bikas Bank Limited (NGBBL) is going to auction 88,564.74 units promoter shares of Rural Microfinance Development Centre (RMDC) from Jestha 16 to Jestha 22, 2074. It has set a minimum bid price of Rs 501. If the shares are subscribed, NGBBL will earn premium of Rs 401 per share. If all 88,564.74 are subscribed above Rs 501, it will earn a minimum of Rs 3.55 crore in premium and Rs 4.43 crore income from this auction. This income will be added to its earnings, which ultimately will be used to provide dividends to its shareholders. For a company that had earned Rs 19.58 crore till the third quarter against a paid up capital of Rs 55.75 crore and had posted an EPS of Rs 46.83, this premium accounts for Rs 7.95 increase in EPS. If NGBBL will be able to maintain its profit growth it showed till the third quarter of the ongoing FY 2073/74, its EPS will be at Rs 54.78. With LTP at Rs 795, the P/E ratio will be at only 14.51—making it one of the most undervalued stocks in the microfinance sector. Nepal Grameen Bikas Bank is also going to issue a further 9,75,000 units shares as a part of its Further Public Offering. NGBBL will be issuing the FPO shares without adding any premium i.e. at Rs 100 per share only.