Shares of PSU banks, Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab and Sind Bank, rallied more than 4% on Tuesday amid report of government considering selling minority stakes in these companies.
Indian Overseas Bank share price jumped as much as 4.4%, while Central Bank of India shares, UCO Bank stock price and Punjab and Sind Bank shares gained more than 3% each.
Analysts expect a decent rally in these PSU bank stocks amid the government’s offer for sale (OFS) buzz.
“Central Bank of India and Punjab and Sind Bank seem to be technically and fundamentally better placed. The government OFS plan would likely be positive and will increase the liquidity for the stock. Hence, I have a bullish view on these two PSU stocks and recommend buying Central Bank of India and Punjab and Sind Bank shares,” said Mahesh Ojha, AVP Research at Hensex Securities.
The Hensex Securities expert further added that the OFS move is expected to bring liquidity to all these PSU banks, but we need to wait for further announcements as the size of the fundraiser is still not clear.
The central government is considering selling minority stakes in these four state-run banks to comply with public shareholding norms mandated by the capital markets regulator SEBI, Reuters reported, quoting sources.
The Finance Ministry is likely to seek approval of the union cabinet in the coming months to dilute the stake in the Central Bank of India, Indian Overseas Bank, UCO Bank, and Punjab and Sind Bank, through an offer for sale in the open market, the news agency quoted government officials.
The government owns more than 93% in Central Bank of India, 96.4% in Indian Overseas Bank, 95.4% in UCO Bank and 98.3% in Punjab and Sind Bank as of end-September, as per the shareholding data from BSE.
However, according to the Reuters report, the timing and the quantum of the sale would be decided based on market conditions.
The Securities and Exchange Board of India (SEBI) requires listed companies to maintain a 25% public shareholding, but has exempted government-owned firms from meeting these norms till August 2026.
At 11:40 AM, IOB shares were trading 2.99% higher at ₹51.36 apiece, Central Bank of India shares were up 2.61% at ₹54.19, Punjab & Sind Bank stock price was trading 2.83% higher at ₹49.06, while UCO Bank shares were up 2.50% at ₹42.63 apiece on the BSE.
(With inputs from Reuters)
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.