IndusInd pays premium to redeem warrants

The promoters of IndusInd Bank are paying Rs 1,709 per share to redeem warrants, a premium of 65% to Wednesday’s closing price.

lnduslnd International Holdings (IIHL), the promoter entity, had paid Rs 673.82 crore for the warrants or 25% of the total price.

Market regulator Securities and Exchange Board of India (Sebi) had given them time till February 18, 2021, to make the remaining payment.

Post the conversion of the warrants into shares, the promoter holding will increase by 1.7% to about 15%, the company said.

Analysts point out the lender needs capital and believe much of the Rs 2,021 crore would be used for provisioning against sub-standard assets. The gross npas (non-performing assets) at the end of the December 2020 quarter at 1.74% were lower than in the September 2020 quarter.

However, the pro forma gross NPAs were 2.93% as the bank has not declared fresh NPAs following the Supreme Court’s orders. Consequently, the lender increased provisions and contingencies for the nine months to December by 175% to Rs 6,077 crore. For this period, the bank’s net profits fell 52% year-on-year (y-o-y) to Rs 2,004 crore. The company’s capital adequacy ratio at the end of December 2020 was 16.34%, slightly lower than the 16.55% at the end of the September 2020 quarter. The IndusInd stock has lost 32% since the time the warrants were issued in July, 2019.

IIHL said it has raised debt by pledging some shareholding of lnduslnd Bank for acquisition/strategic investment to convert IIHL into a listed operating entity outside India by the first week of September 2021.The promoters of IndusInd Bank have pledged 4.27 crore shares, amounting to a 5.6% stake in the bank.