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Best IPOs & Merchant Bankers
best ipos & Merchant Bankers
Winner 1 Indian Overseas Bank

Think PSU bank and it’s likely you’ll think of lazy staff, unionised labour and inefficiency. But Indian Overseas Bank, which tied with Vijaya Bank for Best Public Sector IPO, has tried to break this mindset. In the past five years especially, the bank has seen rapid growth in business.

Started in 1937, IOB ranks eighth among public sector banks (in 2003-04, based on income earned) and is on the Forbes list of 2,000 top firms worldwide (in terms of composite sales, profits, assets and market value). From 195 branches with aggregate deposits of Rs 67.7 crore and advances of Rs 44.9 crore in 1969, the bank now has deposits of Rs 41,483 crore, and advances of Rs 20,295 crore in 2003-04. What’s more, IOB was the first to obtain ISO 9001 certification, and in March 2003, it achieved 100 per cent computerisation.

The bank is taking steps to improve customer satisfaction, product innovation and technology. New products include foreign travel loans, and Money Home, a service that allows remittances from the US to India within five days.

IOB’s financials look good. It cut net NPAs by almost half– from 5.2 per cent in 2002-03 to 2.6 per cent in 2003-04. NPAs are now down to 1.6 per cent. Operating income grew 13.4 per cent to Rs 4,531 crore; net profit grew faster at 43.6 per cent to Rs 586 crore.

A quarter million retail investors bid successfully for its maiden offering of shares, and were well-rewarded too. Six-month returns of over 130 per cent meant they were, well, laughing all the way to the bank.

Winner 2 Vijaya Bank

Small is beautiful’ could well be its motto. Of the 20 nationalised banks in the country, Vijaya Bank ranked a modest 17th in terms of income and number of branches in 2003-04. But it’s perhaps this small size that allowed it to carve a niche in a field where the big guns like State Bank of India and PNB slug it out.

Vijaya Bank, started in 1931, has 910 branches today, but has not lost sight of its niche strategy. It has proved that lending to a larger cross-section of the economy helps mitigate the risk of lending to just a few big borrowers.

The numbers prove this. The bank ranks third among nationalised banks in spread-to-assets percentage. Its spread was 3.5 per cent in 2003-04, compared with leader Oriental Bank of Commerce’s 3.6 per cent. On return on assets, Vijaya Bank came second at 1.91 per cent in 2003-04, after Corporation Bank at 1.96 per cent. Vijaya Bank’s net NPAs were the lowest at 0.91 per cent.

One of the most cost-effective players, Vijaya Bank is now spending big on computerisation and networking, and will also start marketing insurance, credit card and mutual funds to shore up non-banking profits.

Runner-up UCO Bank

It has 1,700 branches across India, and is among the top 10 nationalised banks in terms of income. UCO Bank has steadily grown in size over the years, even though it has focussed its attention on less industrialised states. This means that the bank’s income is largely derived from lending to agriculture and priority sectors, which could be one reason for its comparatively lower return on assets and higher NPAs.

Over the past five years, the Kolkata-based bank has consistently improved its performance–from a loss of Rs 72.6 crore in 1998-99 to a profit of Rs 435.4 crore in 2003-04. Of the three PSU banks that won the awards in this sub-category, curiously UCO had the maximum number of successful retail allottees (over 600,000).




Retail allottees 257,296 328,459 603,469
6-mth return1 (%) 134 181 83
Total income (Rscr) 4,531 2,382 3,620
Net profit (Rscr) 512.8 411.3 435.4
RoNW (%) 39.6 39.2 47.1
Financials for year to Mar 2004                   
Best Private IPOs

Winner Dishman Pharmaceuticals

Investors only recently discovered Dishman Pharmaceuticals & Chemicals: the company completed its first public offer last April. But among all offers from the private sector, this has been the most promising. Dishman’s share price has appreciated nearly 400 per cent since listing.

In business for over 15 years now, Dishman began by supplying speciality chemicals to both pharma and non-pharma companies. It soon forayed into quaternary phosphonium compounds (phosphonium and ammonium quaternary compounds are together referred to as QUATs) and bulk API (active pharmaceutical ingredients) and API intermediates. Over the years, the company has strengthened its R&D capabilities, and developed good relationships with global MNCs. In 1997, in order to become a contract manufacturing organisation (CMO), Dishman set up a modern production facility at Bavla in Gujarat, today a 100 per cent export-oriented unit.

Dishman undertakes contract research and supply of trial products for patent- and licence-holders. It now has eight production units at Bavla, two dedicated to contract manufacturing for Solvay Pharmaceuticals BV of the Netherlands.

Within five years, Dishman has established itself as the preferred outsourcing partner for various pharmaceutical majors. With contract manufacturing revenues growing at a fast clip (40 per cent to Rs 51.4 crore in 2003-04), Dishman aims to be India’s leading CMO.

For the year to March 2004, Dishman clocked a 19.9 per cent rise in net sales to Rs 126.4 crore. Of this, as much as 71 per cent came from exports. Net profit grew 30.1 per cent to Rs 18.7 crore. In the nine months to December 2004, the company reported net sales of Rs 115.3 crore and a net profit of Rs 20.3 crore, giving an annualised earning per share (EPS) of Rs 21.8 for 2004-05.

Dishman plans to introduce a new range of QUATs for different uses. Last year, it spent Rs 55 crore on R&D initiatives, setting up new manufacturing plants, and on expanding its Bavla unit. It also added subsidiaries in West Asia and China; it already has subsidiaries in the US, Europe and Africa. With many blockbuster drugs going off patent, business in low-cost countries like India, China, and Taiwan will look up, especially for companies with skills in contract research and manufacturing.

Runner-up NDTV

Turn on the news, and you’re more than likely to be watching an NDTV channel. NDTV has been generating quality content for nearly two decades now. Recently, it also launched its business channel, NDTV Profit, pitted against Television Eighteen’s CNBC TV18.

NDTV has seen good growth (in all its channels) in ad sales, number of advertisers and brands in the short span since its public issue in 2003-04. For the nine months to December 2004, revenues stood at Rs 116 crore, while net profit was Rs 21 crore. Given its understanding of the market and its experience in generating quality content, there’s no reason why NDTV should not do well in the coming years as well.




Retail allottees 17,959 35,715
6-mth return1 (%) 186 63
Total income (Rscr) 128.9 70.8
Net profit (Rscr) 18.4 -50
RoNW (%) 35.5 -39.9
Figures for year to Mar 2004      1Post-listing
Best Merchant Banker

Winner SBI Capital Markets

The investment banking subsidiary of State Bank of India, SBI Caps is an old player in the capital market, going back to the pre-liberalisation days of 1986. Starting off with merchant banking and project appraisals, it soon expanded its range of activities. It got a boost in 1997 when Asian Development Bank acquired a 13.8 per cent stake.

SBI Caps offers services in the broad areas of mergers and acquisitions, project advisory, structural finance, and capital markets. In M&A, for instance, it offers advice on privatisation, business valuation, and restructuring. In the capital markets, it handles public and rights offers, private placements and buybacks, while ‘project advisory’ involves handling core sectors such as power and telecom. It has also been exploring new avenues like securitisation.

We evaluated SBI Caps purely on the performance of its merchant banking division, restricted to the public offerings it handled between July 2003 and June 2004. SBI Caps has not disgraced its lineage, beating the likes of ICICI Securities and Kotak Mahindra to the top spot.

Merchant banks were ranked on parameters like number and quality of issues handled, and post-IPO returns to investors. Another factor was the number of IPOs whose stock prices dipped below offer price vis-a-vis the number of IPOs the merchant bank handled: the lesser this percentage, the higher the score.

Runner-up Kotak Mahindra Capital

It may have lost out to SBI Caps in the awards stakes but it’s not without reason that Kotak Mahindra Capital had the mandate to manage 13 equity issues (against SBI Caps’ 8) in the year to 30 June 2004–among them several high-profile ones too, such as the ONGC, Biocon, and Infosys ADR offerings. It garnered Rs 19,643 crore from 20 issues between July 2001 and June 2004, which is a measure of its pedigree. However, one of the critical counts on which Kotak lost out to SBI Caps was the average post-listing returns from the issues it had managed.

SBI Caps

 Kotak Cap. 

Equity issues1 8 13
Allottees (million) 2.62 2.81
Avg. IPO returns2  167.8


1For year to 30 Jun 2004
2Annualised as on 3 Jan 2005
Best e-Brokerage

Winner has hogged the limelight since its inception. And grabs our Best e-Brokerage Award yet again. The online broking arm of ICICI Web Trade, an ICICI Bank subsidiary, commands 68 per cent of the total online trading market. Its customer base has grown from 300,000 last year to 550,000 today. It has 450 branches across India, and also covers Singapore and the Gulf.

The long-term plan is to graduate from being just an e-brokerage to a one-stop shop for personal finance products and services. The platform already sells health, home, overseas travel and life insurance products online. While you can pay online for general insurance products from ICICI Lombard, a physical follow-up from ICICI Pru representatives is necessary when buying life insurance products. The portal also enables online investing in postal savings instruments such as NSC and KVP. It has made CallNTrade available across 300 towns, allowing customers to use the phone to trade if they are unable to get online.

All bank transactions have to be through ICICI Bank– the direct connectivity between trading, demat and bank accounts makes transactions quicker and safer. ICICI direct is also the first broker in India to introduce Digitally Signed Contract Notes. The process has been automated and they are instantly and securely available online. The only negative: small investors pay slightly higher charges on ICICIdirect (0.75 per cent of the order value in the cash segment) than on other trading platforms.


The customer base of the second ranked trading platform has been growing rapidly in recent months, from about 40,000 in December 2003 to 63,000 today. The portal allows trading in equities, derivatives and mutual funds, besides offering insurance and loans online. It has 78 branches in 64 cities, and it hopes to double this number over the next year.

The site gives customers real-time data and prices, and analysis backed by powerful technology. Service is real-time with 24x7 access to all information on the portal. The company has a tie-up with HDFC Bank and ABN Amro Bank for banking, and clients are not bound to use a specific DP account. Indiabulls’ charges are competitive: 0.5 per cent of the order value for the cash segment and 0.1 per cent for derivatives. It is now looking to diversify, and build its loans business aggressively over the next two years.


India Bulls

No. of clients1 510,000 63,000
Branches 450 78
Brokerage (% of order value)
  Cash segment






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1As of Dec 2004

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