Lack of investor interest in rights issue weighs on Dhanalakshmi Bank

Dhanalakshmi Bank slipped 3.98% to Rs 59.10 at 10:07 IST on BSE after the bank extended the closing date of its rights issue by a month.

The scrip had touched a high of Rs 61 and a low of Rs 58.40 so far during the day. The stock had hit a 52-week high of Rs 117.67 on 21 January 2008 and a 52-week low of Rs 38.78 on 2 April 2007.

The small-cap private sector lender has an equity capital of Rs 64.12 crore. Face value per share is Rs 10.

At the current price of Rs 59.10, the scrip trades at a PE multiple of 8.56, based on Q3 December 2007 annualised EPS of Rs 6.90.

The net profit of Dhanalakshmi bank rose 77.80% to Rs 5.53 crore on 28.60% rise in operating income to Rs 85.98 crore in Q3 December 2007 over Q3 December 2006.

The rights issue of the bank saw poor response, with shares trading slightly below the rights issue price, which is fixed at Rs 62. According to reports, senior bank officials approached the Reserve Bank of India (RBI), seeking an extension of the deadline for the issue. The rights issue opened on 19 February 2008 and was slated to close on 19 March 2008, which is now being extended to 17 April 2008.

Dhanalakshmi Bank provides banking and treasury services to corporate and private customers. It operates through 181 branches and 26 extension counters spread over 8 states in India.