IPO Investors Cheers Up Again: Udhyam in Public

Amid the fearful situation in secondary market, primary market has spread its delight at home capital market. There were seven primary issues within just couple of months. First, Miteri Development Bank followed by Asian Life Insurance Company, Mahakali Development Bank, Kasthamandap Development Bank, pathibhar Bikash Bank, Resunga Development Bank. However, Miteri Deveopment Bank has allotted its shares to public and others are yet to allot the shares.

From Dec 13, another development bank is floating its shares to public letting extra delight to investors who seeks out for primary investment. Udhyam Bikash Bank, the 'B' class bank licensed by the central bank of Nepal is floating 150,000 units right share at face value of Rs. 100 per share. The 3000 units have been reserved to its employees.

General Description of the Bank

Name: Udhyam Bikas Bank Limited

Licensed: "B" class development bank

Registered Central Office: Bharatpur (Chitwan)

Banking Operation: Chitwan District and can be extended to Tanahu and Kaski as per the rule of NRB.

Capital Structure and Ownership Composition after Allotment:

Authorized Capital: Rs.10,00,00,000

Issued Capital: Rs. 5,00,00,000

Paid-up Capital: Rs. 3,50,00,000 (promoter share 70%)

Public Issue: Rs. 1,50,00,000 (public share 30%)

Total Paid-up Capital after Primary Issue: Rs. 5,00,00,000 (5,00,000 @ Rs. 100).

IPO Date:

Opening Date: 13 December 2009 (2066 Mangsir 28)

Closing Date: 16 December 2009 (2066 Poush 1) (Sooner)

27 December 2009 (2066 Poush 12) (Later)

Minimum Units to apply: 50 units

Maximum units to apply: 10,000 units

Board Of Directors:

Name                         Designation               Address                                                                                              

Dr. Sunil Maske                Chairman           Bhimeshwor-2 Dolkha  
Sajeev Pradhan                 CEO                Bishal Nagar-Ktm
Bhaktalal Shrestha             Member             Banasthali-Ktm
Ramji Prasad Bastola           Member             Pokhara-9, kaski
Shankhar P. Adhikari           Member             Bharatpur-Chitwan

(Two Board members will be appointed from general shareholders and one from NRB specialist)

Promoter Shareholders:

Total Promoter Shareholders: 51

Highest unit holder: Suresh Chandara Poudel (37500 units)

Satish Bastola (20000 units)

Kabindra Lal Amatya (11000 units)

Financial Performance:

Though the bank encountered losses in the fiscal year 2063/64 (-5110000) and 2064/65 (-5821000), it rebounds with the reasonable profit during the fiscal year 2065/66 which is Rs. 7,481,000 (Can be termed healthy). Likewise, the bank has earned earning per share of Rs. 21 during the fiscal year 2065/66 which is reasonable in terms of return in investment however the most of the money to increase this has came through the bad debt recover (which might not be in next year). However, if we look at the expected return for next fiscal year it diminished drastically with EPS Rs. 3.30 and profit limited to Rs. 1,942,000. The difference is just because of the recovery in bad debt previous year.

Strategy:

Investment in IPO is easy and safe. Hence, investment in this bank's IPO will be profitable as well if allotted. But if you are expecting good return on year on year, there might be disappointment as banks might not provide enough return in terms of bonus share or cash dividend (as per its expected profit and loss account) except the right shares. The strategy should be, invest in IPO and if allotted look out for the trend in secondary market, sell it at bullish period and take the lucrative return before the price will fall down.

Source: Jamb News Services