United Bank of India IPO Review

United Bank of India, a PSU Bank is coming out with an IPO of 50 million shares of Rs.10 each at a price band of Rs.60- Rs.66. The bank has a well established network of about 1500 branches with 16,000 employees.
The bank is mainly into retail , corporate / wholesale, priority sector, treasury operations and other services such as agency functions for insurance and mutual fund distribution.

Details of the issue:

Issue Size: 50,000,000 Equity Shares of Rs. 10.
Face Value: Rs. 10 Per Equity Share.
Price Band: Rs. 60 – Rs. 66.
Issue Open: Feb 23, 2010 – Feb 25, 2010
Minimum Bid Quantity: 100 Shares.
Listing At: BSE, NSE.

The bank has made a very good improvement during the last five years of its operation. It is clearly one of the fastest growing banks in the industry.
The book value per share stands at Rs 94.75 and even at the higher end of the price band, the price to book value (P/BV) ratio stands at 0.7. Comparing with the other smaller PSU Banks such as Corporation Bank, Andhra Bank and Bank of Maharashtra, which are trading at a P/BV of 1.2, the IPO is clearly at a discount.

Also, the management has announced a discount of 5% for retail investors and hence long-term investors can subscribe to the issue.

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