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Axis Bank is going for a Rs 10,000-crore fundraise via a QIP. What kind of participation can we expect with the floor price of Rs 442?
Capital raising is a must for most of the banks in the current environment and Axis is coming at the right time. On the issue side, I presume it is a mix of instruments and from my calculation, I have considered Rs 10,000 crore at a price of Rs 420, assuming that they offer a 5% discount.
Participation levels should be strong and the market should react positively to this announcement. I take it positively on a net-net basis. One thing I would like to highlight is that based on my calculation, their PET ratio which was 13.5% before the issue should improve almost 150-160 bps on conservative estimation. All these factors give the confidence that money is coming even at difficult times for banks which are well managed and given the fact that the banks are trading at a discount to below their five year average price to book value, I think investor will grab the opportunity to subscribe to the issue. I am positive on this and I feel a potential 15% to 20% upside on the stock in the near term cannot be ruled out. I stay positive post the announcement of the deal.
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Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price