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IDFC First Bank, which has demonstrated remarkable growth over the past year, is gearing up for a Qualified Institutional Placement (QIP) to raise approximately Rs 3,000 crore, as reported by CNBC TV18, citing unidentified sources. This move comes as the bank aims to bolster its capital base in light of its impressive performance in the market.
In the last 12 months, IDFC First Bank’s shares have witnessed a staggering surge of 97.2 percent, nearly doubling investors’ wealth, while the Nifty 50 index recorded a one-year run of 16.1 percent. Additionally, the bank’s shares have outperformed its sector by a remarkable 54.37 percent during the same period, according to Trendlyne data.
The QIP, scheduled for October 3, is expected to include a green shoe option and is likely to be priced in the range of Rs 90-91 per share. This pricing represents a 3-4 percent discount to the closing share price of Rs 94.25 on October 3.
The QIP is being managed by a consortium of domestic and foreign firms, a strategic mix aimed at ensuring the successful fundraising effort. Shareholders had previously approved this fund-raising initiative during the bank’s annual general meeting (AGM) held in August this year.
This is not the first time IDFC First Bank has turned to the QIP route for capital infusion. In 2021, the bank successfully launched a QIP at an issue price of Rs 57.35 per share, resulting in the allocation of 52.31 crore equity shares to qualified institutional buyers, raising a total consideration of Rs 3,000 crore.
From a technical perspective, IDFC First Bank is currently trading below its 5-, 10-, and 20-day moving averages but remains above its 50-, 100-, and 200-day averages. The bank’s market capitalization stands at Rs 63,291.9 crore, with a one-year beta of 1.29, indicating significant volatility in its share price.
As of June 2023, the bank’s promoters held a 39.9 percent stake, while Domestic Institutional Investors (DIIs) and Foreign Institutional Investors (FIIs) owned 20.9 percent and 11.7 percent, respectively, with the public holding a 27.5 percent stake.
Notably, a substantial portion of the bank’s impressive gains occurred over the past six months, during which IDFC First Bank witnessed a remarkable 71.68 percent surge in its share price. However, it is worth noting that the stock recently retreated from its 52-week high of Rs 100.7, closing down by 6.4 percent on October 3.
IDFC First Bank’s decision to raise capital through the QIP reflects its commitment to maintaining its growth trajectory and strengthening its position in the financial sector. Investors and industry watchers will be closely monitoring the outcome of this fundraising effort as the bank continues to make strides in the market.
Sources By Agencies
