State-run UCO Bank (NSE:UCBK) Ltd. successfully concluded its Qualified Institutional Placement (QIP) on March 27, raising INR 2,000 crore to strengthen its capital base and comply with Minimum Public Shareholding (MPS) norms.
The QIP issue was launched on March 24, and the bank has approved the allotment of 58.36 crore shares to institutional buyers at INR 34.27 per share—a 6.5% discount to the stock’s last closing price.
Among the key participants in the issue were Life Insurance Corporation (NSE:LIFI) of India (LIC) and various National Pension System (NPS) Trust funds, reflecting strong institutional interest in the lender.
Following the allotment, UCO Bank’s paid-up equity share capital will rise from INR 11,955 crore to INR 12,539 crore, with the number of outstanding shares increasing accordingly.
Government Stake Dilution Underway
UCO Bank is among the state-run lenders raising capital via QIP to reduce government shareholding, aligning with regulatory requirements. As of December 2024, the government held a 95.39% stake in the bank, necessitating further stake dilution to meet SEBI’s 25% public shareholding mandate.
Other public sector banks (PSBs) have followed a similar approach. Recently, Indian Overseas Bank (NSE:IOBK) (IOB) raised INR 1,500 crore, and Central Bank of India (NSE:CBI) also completed its institutional share sale, indicating a broader trend among PSBs to enhance capital adequacy and increase market participation.
Valuation Insights: Is UCO Bank a Good Buy?
While the QIP strengthens UCO Bank’s capital position, investors must also consider its valuation before making an investment decision. According to InvestingPro’s Fair Value feature, UCO Bank’s intrinsic value stands at INR 38 per share, implying a modest 3.6% upside from the current market price of INR 36.7.
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For investors looking to assess whether a stock is overvalued or undervalued, InvestingPro’s Fair Value tool provides highly precise valuations by leveraging multiple financial models. This feature enables users to make data-driven investment decisions in a volatile market.
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