Punjab National Bank bounded between a high of Rs 175 and a low of Rs 165, showing much volatility in early trades.

After that early oscillation, the scrip settled to a flattish Rs 172.70  at 10:10 IST, up 0.91%.

Over 3.55 lakh Punjab National Bank (PNB) shares were traded on BSE by then.

The scrip had made substantial gains yesterday, jumping  13.5% to Rs 170.65. The stock eased towards the end after touching an all time high of Rs 178.90 per share.

The volatility in the scrip today stems from selling by some market players who seem eager to consolidate gains over the past few sessions. In fact, the scrip has rallied 359% from Rs 37.50 (on listing) on 26 April 2002.

As per market talk, there was major buying on the counter conducted yesterday by Alliance, Salomon Smith Barney, Birla Sun Life and DSP Merrill Lynch Brokerage.

The buying came ahead of and after the results announced by PNB on Monday. For Q4 ended 31 March 2003, PNB announced a  massive 85% rise in net profit to Rs 431.1 crore (Rs 233.3 crore) on a 11% increase in interest earned to Rs 3,755.01 crore (Rs 3,392.91 crore).

For FY 2002-03, the company recorded a 50% rise in net profit to Rs 842.2 crore (Rs 562.4 crore) on a 14.5% increase in total income to Rs 8,735 crore (Rs 7,626 crore).

In FY 2002-03, the total business of the bank rose by 17.8% to Rs 1,16,044 crore (Rs 98,492 crore). Deposits grew by 18% to Rs 75,800 crore (Rs 64,000 crore), while advances rose by 17% to Rs 40,228 crore (Rs 34,369 crore).

The banks capital adequacy ratio (CAR) stood at 12%, higher than the RBI mandated 9%. It showed an improvement from 10.7% in 2001-02, despite merger with the Kerala-based Nedungadi Bank.

However, the prime mover for the stock as of now is the announcement by the company that it plans to reduce its capital by returning equity to the government.

PNB is expected to return Rs 130 crore of equity to the government out of the total equity of Rs 265.30 crore. Currently, the government holds 80% (Rs 212.24 crore) equity stake in PNB. With the return of equity, the government holding in the bank will drop to 60% from 80%.

The return of capital would be done by way of return of recapitalisation bonds, which the bank is holding since 1994.

With the capital reduction, the company's EPS (on the basis of its full year results) should rise from Rs 31.7 to Rs 62.2. But some analysts are apprehensive about the company's getting the government's nod for capital reduction. This perhaps has held back the scrip today.

PNB had come out with its initial public offer (IPO) of 5.30 crore shares at Rs 31 per share on 21 March 2002. The issue was oversubscribed 4.4 times.

Subsequently (in April 2002), PNB got listed on three exchanges - the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and the Delhi Stock Exchange (DSE).

Recently, PNB merged its operations with the Kerala-based Nedungadi Bank, thus paving the way for the New Delhi-based bank's expansion in the southern state.

The 108-year-old PNB is among the oldest professionally managed institutions in the Indian banking industry. It has one of the largest domestic branch networks (4,262 branches as on 31 December 2001) in the country, including 3,861 branches and 401 extension counters.

Of these, 365 branches have been awarded the ISO 9002 certification. This vast domestic network of branches offers the bank a very low-cost deposit base.

PNB has been servicing its customers by offering a gamut of financial products in retail and corporate banking, industrial finance, agricultural finance, financing of trade and international banking.

The bank has appointed international consulting firm Boston Consulting Group (BCG) to help it in restructuring operations. It is implementing recommendations of BCG in the areas of organisational structuring, credit and treasury functions, realignment of branches, retail and office control functions.

PNB has widened its product portfolio by venturing into new business areas like gold dealing, insurance and credit cards. Its subsidiaries provide services relating to capital market, housing finance, asset management, government securities, etc.

As on 31 March 2003, the public and institutions held 8.63% and 9.79%, stake respectively in PNB.