Axis Bank shares fall 6% on SUUTI stake sale buzz

MUMBAI: Shares of Axis BankBSE -5.84 % fell nearly 6 per cent, the most in 11 months, on market buzz that Specified Undertaking of Unit Trust of India (SUUTI) may announce the sale of its stake in the lender at any time.

However, bankers said they are yet to start the groundwork and the Axis Bank offer for sale will not happen soon.

SUUTI came into being in 2003 following the break up of staterun asset management company Unit Trust of India. SUUTI holds an 11.94 per cent stake in Axis Bank worth Rs 15,309 crore based on the bank’s stock price.

On Friday, Axis Bank shares closed 5.84 per cent lower at Rs 557.40 on the Bombay Stock Exchange. The benchmark Sensex fell 0.36 per cent.

“The panic started after Axis Bank in a stock exchange filing post closure of market hours on Thursday announced the schedule of an investor conference held in Hong Kong on September 22, which confused many of the investors as a roadshow for SUUTI’s stake sale,” said Rikesh Parekh, vice-president of markets strategy at Motilal Oswal Financial Services.

Last week, Goldman Sachs downgraded Axis Bank stock to ‘neutral’ from ‘buy’, citing fair valuation concerns. It expects a likely improvement in operating metrics balancing asset quality risks at the lender.
In the past one year, Axis shares have risen 15 per cent, outperforming the Sensex that gained 11 per cent.

Recently, SUUTI appointed Morgan Stanley, ICICI Securities and Citibank as merchant bankers to manage the sale of its shareholding in various listed and non-listed companies, including Axis Bank, ITCBSE -0.61 % and Larsen & Toubro.

The mandate is to advertise, assist and advise on the sale of SUUTI’s stake in different companies over a three-year period, said people in the know of the matter.SUUTI has also appointed three banks -JM Financial, HSBC and SBI Capital -as standby in case of conflict of interest, they said.

The other major holdings of SUUTI include an 11.14 per cent stake in ITC worth Rs 22,777 crore and another 8.32 per cent in L&T worth Rs 11,366 crore as on Friday.

In July, SUUTI had floated a revised request for proposal document by diluting the conflict of interest clause for bankers managing the stake sale. The government holds stakes in 51 companies through SUUTI.