Shares in ICICI Bank rose as much as 6.8 percent to a record high on Thursday after its managing director said India's top private-sector bank wanted to list at least four subsidiaries, starting with its broking arm.
India's most-valuable bank could also list two insurance firms and a housing finance arm, Managing Director K.V. Kamath told the Press Trust of India (PTI) new agency. "At current levels we are undervalued ... value is visible in insurance and asset management company, while there is value embedded in securities and home loan subsidiaries," Kamath said in a PTI report carried in local media.
On Monday, Reuters reported market talk that ICICI Bank was considering an IPO for ICICI Securities, its investment banking and broking unit. ICICI shares rose more than 6 percent on Monday, before falling on Tuesday and Wednesday.
The shares ended Thursday up 3.5 percent at 1,356.70 rupees, having earlier hit an all-time high of 1,399.90 rupees, to be the only share in the 30-share benchmark index to gain on the day. The index fell 1.4 percent. ICICI shares have risen 10 percent this month.
"When the subsidiaries are inside the company, the sum-of-the-parts valuations are a bit conservative and the multiples are very less,' said Hatim Broachwala, a sector analyst with Khandwala Securities.
"ICICI Securities listing could be a positive surprise," said Broachwala, who gave it a value of 25-30 rupees a share in a sum-of-the-parts valuation of ICICI Bank. Kamath told PTI that the first listing could be in about six months, as the bank's board had not yet approved the plans.
ICICI Securities is the largest online player in retail broking in India, with a share of more than 3 percent of the volumes on the National Stock Exchange, CLSA analyst Aashish Agarwal said in a report.
The unit has a client base of 1.4 million and was aiming for a customer base of 2.5 million by 2008/09, Agarwal wrote after attending a presentation to select investors by the bank on Monday. Agarwal said ICICI Securities' net profit was estimated to grow at an annual average rate of more than 50 percent in next few years.
ICICI's Kamath said the bank could also list its mutual fund arm and ICICI Ventures Ltd, a private equity firm, at some point. "Every company needs to consider unlocking of value at various points of time ... at this point of time it would be appropriate to start considering opportunities."
Shares in ICICI Bank, valued at about $38 billion, rose 38 percent in 2007, lagging a 90 percent rise in government-run State Bank of India and a 47 percent rise in the main index.