Bank of Maharashtra Launches Rs.3,500 Crore QIP Issue

Bank of Maharashtra has initiated its Qualified Institutions Placement (QIP) on September 30, 2024, aiming to raise up to Rs.3,500 crore. The public sector lender has set a floor price of Rs.60.37 per share, marginally higher than the previous closing price of Rs.59.83. The bank may also offer a discount of up to 5% on this floor price, as stated in its regulatory filing.

What’s the Plan?

The bank is looking to raise Rs.1,750 crore initially, with an additional Rs.1,750 crore available through a greenshoe option, which brings the potential total to Rs.3,500 crore. They’re planning to sell up to 61 crore shares, or 8.6% of the bank’s total stake, through the QIP. The indicative issue price could be around Rs.57.36 per share, giving institutional buyers a nearly 5% discount.

Background & Financials

Earlier this year, the Bank of Maharashtra’s board approved a broader plan to raise Rs.7,500 crore this financial year through various fundraising options. Shareholders backed this plan in June, giving the go ahead to raise money via methods like FPO, rights issue, or QIP, depending on market conditions.

The bank’s financials are looking good too. For Q1FY25, it reported a net profit jump of 47% year-on-year, hitting Rs.1,293.5 crore. This performance was driven by a 20% increase in net interest income (NII), which totaled Rs.2,799 crore for the quarter. The bank’s asset quality is improving too, with gross non-performing assets (NPA) down to 1.85%, a small but important improvement.

Conclusion: With this QIP, the Bank of Maharashtra is setting itself up to strengthen its capital and fuel growth. The bank’s stock has already gained 32% this year, outpacing the Nifty’s 18% rise, and with this fundraising push, it’s clearly preparing to build on that momentum. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.