Shares of Indian Bank have been under stress for two days, falling nearly 12% during this period, in sync with the broader market. The public sector lender witnessed profit booking at higher levels, which was in line with frontline banking stocks. The PSU bank stock gained over 82% in nine months, rebounding from its 52-week low of ₹253.35 on February 28, to a fresh 52-week high of ₹462.75 on December 15, 2023.
On Thursday, Indian Bank shares opened 7.6% lower at ₹396.40, after closing 4% down in the previous session at ₹428.95 on the BSE. During the session so far, the PSU bank declined as much as 8.25% to ₹393.55 levels.
At the time of reporting, Indian Bank share price was down 5.6% at ₹405, while the market capitalisation slipped to ₹54,552 crore. On the volume front, there was a surge in selling activities with over 12 lakh shares changing hands over the counter as compared to two-week average of 1.18 lakh stocks.
Today, 10.15 crore equity shares of Indian Bank, allotted to qualified institutional buyers (QIBs), got listed on the stock exchanges. Last week, the board of the PSU lender, on December 15, approved the qualified institutional placement (QIP) issue and allotment of 10.15 crore new equity shares of face value ₹10 each to eligible QIBs at an issue price of ₹394 per equity share. The bank raised ₹4,000 crore through the QIP, a method of fundraising used by the listed companies to raise capital by selling shares to QIBs.
In July this year, CRISIL had reaffirmed ‘AAA’ rating on the debt instruments of Indian Bank, with a ‘stable’ outlook, supported by the regular capital infusion by the Government of India (GoI), equity raised via QIP, and improved accruals. In September 2021, the bank had raised ₹1,650 crore through the QIP route.
For the September quarter of 2023, Indian Bank reported a 61% growth in net profit to ₹2,068.49 crore, compared to ₹1,287.39 crore in Q2 FY23, driven by 23% increase in net interest income. The total income of the Chennai-based bank jumped 25% to ₹15,929.4 crore in Q2 FY24, compared to ₹12,714.2 crore in the same quarter of FY23.
On the asset quality front, the gross non-performing assets as a percentage of total loans improved to 4.97% as of September 30, compared with 7.3% a year ago, and 5.47% a quarter ago. The net non-performing assets ratio was 0.6% in Q2 FY24, compared with 1.5% in the year ago period. However, provisions for the quarter more than doubled to ₹764.32 crore from ₹345.48 crore a year ago.
Until fiscal 2020, slippages for the bank were high at ₹18,567 crore (5.7% of opening net advances) and ₹17,171 crore (5.6%), respectively, in fiscal 2019. This was on account of slippage in a few large corporate accounts. The slippages have been lower since then and for fiscal 2023 it was at ₹7,042 crore (₹10,165 crore for fiscal 2022), as per CRISIL report.
The recent improvement in asset quality has been supported by various schemes launched by the GoI and RBI, like emergency credit line guarantee scheme, which has benefitted the micro, small & medium enterprises. Adding to it, the bank’s focus on recoveries, aided by recoveries through the Insolvency and Bankruptcy Code route, led to improvement in gross NPAs. As on March 31, 2023, gross NPAs from the corporate segment stood at around 2.65%, followed by micro, small and medium enterprises (13.52%), agriculture (8.76%), and retail (3.48%).
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