Highest rated public issue currently registers loss of Rs 60 per share; Was the FPO of Standard Chartered Bank worth it?

Tue, Nov 27, 2018 6:55 AM on IPO/FPO News, Stock Market, Latest,

-Puskar Shrestha

The FPO issue of Standard Chartered Bank Nepal (SCB) had registered a number of feats to its name. The bank had issued 25,58,140 units shares worth Rs 3.30 arba as part of its Further Public Offering (FPO) from Chaitra 1 till Chaitra 4, 2073 at Rs 1,290 per unit (Rs 1,190 premium added to the face value of Rs 100).

ICRA Nepal had graded “IPO Grade +2” rating to the FPO issue which is the highest ever rating received by any public issue of Nepali companies. The FPO issue had collected Rs 38.20 arba (oversubscribed by more than 11.57 times) from 2.23 lakh applicants. Out of the applicants, 1,40,132  applicants had received the shares.

It has been more than 18 months since the allotment and has it been up to mark?

As of Mangsir 09, 2075, the market price of SCB stands at Rs 585.The bank had further issued 100% bonus shares for its shareholders (mostly from the premium collected from FPO and reserves, to meet up Rs 8 arba paid up capital as mandated by NRB). And if we consider the issue price of FPO i.e Rs 1,290, the price after adjustment of 100% bonus shares would be Rs 645. The investors who had invested in the FPO of the bank then are in a loss of Rs 60 per share now. During FPO period, the price of SCB was hovering around Rs 2100 – 2300 range.

While the 52 week high stands at Rs 2,299 while the lowest price is of Rs 585. The highest ever rated public issue seems to have failed to meet the expectation of the investors. This is probably, the lowest trading price of SCB, in last one decade and more time period.

Recently, the bank has announced 17.5% cash dividend on its Rs 801 crore paid up capital from the profit it made in 2074/75 FY.

What is the status of other FPO issue?

Along with the issuance of FPO of Standard Chartered Bank; Nepal Life Insurance Company, Pokhara Finance, Grameen Bikas Laghubitta, Premier Insurance, Nepal SBI Bank, Nepal Bank, NMB bank, Citizen International Bank and Butwal Power Company had issued FPO for the general public. But most of the issue have not been upto the expectation of the investors and trading below the issue price of FPO even after adjusting any Right/ dividend given by the company so far.

For instance, the FPO issue of Butwal Power Company is in a loss of more than Rs 100 per share. But it does not mean that all the FPO issues are facing the same fate. The FPO of NLIC has been enjoying gain of more than Rs 150 per share as of the current market value (after adjusting both FY dividend given by the company). But again it’s been almost 2 years, since NLIC has issued 30.56 lakh units FPO share at Rs 1425 per share.

Where is SCB lagging behind?

Its downfall in the market price is also well complimented by its financial performance. The bank which used to be one of the top commercial banks seems to have lost its charm among the customers. The bank has failed to enter in the billionaire’s list after the first quarter while its loans and deposit also stand below the industry average.

The investors who showed high level of trust are facing unexpected loss in the stock market. It can just be hoped that the bank revives to its older self and meet the investors’ expectation.

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