Niti Aayog having sent 2 names of PSB and 1 name of General Insurance company, on Thursday 3rd June, to Core Group of Secretaries on Disinvestment, for privatisation, has made Media and Experts to wildly speculate on these names, with no logic or reasoning being given or analysed by them. Even we speculated on Bank of Maharashtra, on which reasoning were given by us, for last over 45 days.
One leading Print & Business Channel Group speculated on Central Bank and IOB, as 2 probable banks, which we tried to analyse and reached on our conclusion, why both, Central Bank and IOB, cannot get included for privatisation.
For IOB -
1) IOB is yet to declare it Q4 FY21 numbers, which is due on 14th June at Chennai, without which no strategic sale decision can be taken.
2) On 2nd June, 21, IOB Board allotted 246.54 cr equity shares of Rs. 10 each, at Rs. 16.63 per share to Govt, for Rs. 4,100 cr, which is a capitalisation and need based capital infusion move. Niti Aayog will not be able to recommend it on the next day, as also, Govt may not be able to justify this capital infusion, if put it on the block now.
3) IOB M cap is at Rs.40, 750 cr, (and not Rs. 35,421 cr as shown by BSE), which is seen too big for strategic sale.
For Central Bank -
1) Central Bank declared its Q4 FY21 numbers, yesterday 7th June at 2 pm. Hence no strategic sale decision would have taken by Niti Aayog on 3rd June.
2) On 29th May, Central Bank Board allotted 280.54 cr equity shares of Rs. 10 each, at Rs. 17.11 per share to Govt, for Rs. 4,800 cr, which is a capitalisation and need based capital infusion move. Niti Aayog would not have been able to recommend it in less than 1 week, as also, Govt may not be able to justify this capital infusion, if put it on the block now.
3) Central Bank M cap is at Rs.19,966 cr, (and not Rs. 13,514 cr as shown by BSE), which is seen too expensive for strategic sale, when Bank has GNPA of 16.35% and NNPA of 5.77% (highest among probable 6 banks seen for privatisation).
Lots of vested interests, including Media, Investment experts and Social media are seen working for big fish, either causing losses to retail investors or not caring for them.
We feel almost certain that both banks may not have recommended by Niti Aayog, for privatisation.
Also, it would be prudent on part of the Govt, to reveal these names, which otherwise are creating undesired speculation and volatility, in the larger interests of retail and small investors.
This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.