Allahabad Bank is India's oldest bank. It was established in 1865. Bank was natinalized in 1969. Currently its headquarter is in Kolkata. The bank has more than 1900 branches in India. It has one branch in Hong-Kong and an office in China.
Capital adequacy ratio - 13%
Friday, June 27, 2008
Saturday, June 14, 2008
Real Estate Sector in India - Challenges
Real estate sector in India is facing following challenges -
Demand Slowdown
High Interest Rates (18 - 20% By Banks)
Rising Input Costs (Cement and Steel Prices are increasing)
Cash Crunch (Most of real estates are facing 50-70% cash crunch and this has forced them to pick up cash from unorganised sectors at interest rates as high as 35% to 50%)
Demand Slowdown
High Interest Rates (18 - 20% By Banks)
Rising Input Costs (Cement and Steel Prices are increasing)
Cash Crunch (Most of real estates are facing 50-70% cash crunch and this has forced them to pick up cash from unorganised sectors at interest rates as high as 35% to 50%)
Capital Gain Tax Liability - Open Offer
Capital gains tax liability on shares tendered through the open offer route -
Tendering stocks through an open offer invites a higher incidence of tax, when compared with selling in the open market. The short-term capital gains are taxed at their applicable tax rate and long-term gains are taxed at 10 per cent.
Tendering stocks through an open offer invites a higher incidence of tax, when compared with selling in the open market. The short-term capital gains are taxed at their applicable tax rate and long-term gains are taxed at 10 per cent.
Challenges being faced by Indian Public Sector Banks
In India, public secotr banks(PSB) have 51% goverment holding. This has become an obstacle in raising capital.
PSBs are shouldering many social-macro economic objectives such as financial inclusion, agri-lending targets, implementation of Government schemes which, some times, result in lower asset quality.
Public Banks also have to deal with staff unions, whose interests are not the same as that of the bank or country. They hold managements of banks to ransom.
Attrition is also a challenge given the remuneration levels in the public sector. PSBs are losing out good talent which is migrating to the private sector.
Identifying estimated $600 billion spending on infrastructure in next five years, expanding middle class and growing per capita consumption are some of the challenges being faced by PSBs. In these circumstances, talent, operation and control and ownership are biggest issues for PSB banks in achieving competitiveness
PSBs are shouldering many social-macro economic objectives such as financial inclusion, agri-lending targets, implementation of Government schemes which, some times, result in lower asset quality.
Public Banks also have to deal with staff unions, whose interests are not the same as that of the bank or country. They hold managements of banks to ransom.
Attrition is also a challenge given the remuneration levels in the public sector. PSBs are losing out good talent which is migrating to the private sector.
Identifying estimated $600 billion spending on infrastructure in next five years, expanding middle class and growing per capita consumption are some of the challenges being faced by PSBs. In these circumstances, talent, operation and control and ownership are biggest issues for PSB banks in achieving competitiveness
Repo Rate
Repo rate is the rate at which banks borrow from central bank.
Impact of Repo Rate hike -
If central bank raises the repo rate then banks are paying more interest for borrowing money. Hence banks will also have to increase the rates as which they lend the money. This interest rate hike by banks will reduce the loan demand. This will reduce demand for commodities which in turn will help in reducing the inflation rate.
Impact of Repo Rate hike -
If central bank raises the repo rate then banks are paying more interest for borrowing money. Hence banks will also have to increase the rates as which they lend the money. This interest rate hike by banks will reduce the loan demand. This will reduce demand for commodities which in turn will help in reducing the inflation rate.
Reliance Communications - RCOM
RCOM and MTN -
RCOM and MTN are pursuing discussions to strike a complex deal which, if consummated, will result in Anil Ambani emerging as the single-largest shareholder of the South African telecom major while his RCOM will become a subsidiary of MTN. Both the companies had signed a 45-day exclusive discussion agreement on May 26.
If RCOM’s reverse merger with MTN goes through, it will create a telecom colossus with 115 million subscribers across 23 countries in Asia, South Africa and the Middle East. Anil Ambani is expected to hold nearly one-third equity in MTN and he is likely to the chairman of the company.
RCOM and MTN are pursuing discussions to strike a complex deal which, if consummated, will result in Anil Ambani emerging as the single-largest shareholder of the South African telecom major while his RCOM will become a subsidiary of MTN. Both the companies had signed a 45-day exclusive discussion agreement on May 26.
If RCOM’s reverse merger with MTN goes through, it will create a telecom colossus with 115 million subscribers across 23 countries in Asia, South Africa and the Middle East. Anil Ambani is expected to hold nearly one-third equity in MTN and he is likely to the chairman of the company.
Gujarat NRE Coke
Gujarat NRE coke is India's largest producer of low-ash metallurgical coke, which is witnessing a global surge in demand and price. The company's recent acquisition of coal mines in Australia augurs well for the stock. Further, this company is expanding its wind power generation capacities from the current 27.5 mw to 87.5 mw by September this year. This would again be good for the stock. With robust demand for coke and rising prices, backward integration looks attractive at these levels.
Bartronics
Bartronics is a manufacturer of smart cards. It provides solutions by undertaking large-scale turnkey projects in bar coding and radio frequency waves identification and biometric technologies. This company has a US subsidiary, Bartronics America, which has recently been granted a patent by the US Patents Office to design and manufacture an identification device that could be used as a wristband or bracelet that would be very useful for cashless transaction.
The company is already in talks with Disneyland and Formula One headquarters for their cashless transaction solutions across the globe. It has recently started manufacturing from its Hyderabad facility, which is the largest in South Asia. I expect this company to grow rapidly in the coming years with explosive growth being witnessed in organized retail. My target for Bartronics would be Rs 250.
The company is already in talks with Disneyland and Formula One headquarters for their cashless transaction solutions across the globe. It has recently started manufacturing from its Hyderabad facility, which is the largest in South Asia. I expect this company to grow rapidly in the coming years with explosive growth being witnessed in organized retail. My target for Bartronics would be Rs 250.
Sunday, April 27, 2008
Yes Bank - Fundamental Analysis
YES BANK is a private sector bank focused heavily on corporate banking . It's Public offer was launched in 2005. Its currently in high growth phase. It has recorded 130% of CAGR (Consolidated Annual Growth Rate) in last 3 years. The bank is expanding the network of its retail branches to tap cheaper current account and savings account (CASA) deposits and also plans to enter other lines of businesses.
Business
1. Yes bank was set up in 2004.
2. Emphasis on Corporate and Wholesale Banking
3. It focuses on sectors such as agri-business, infrastructure management, life sciences, health care, technology, telecom, commodities and energy. Corporate and institutional banking is its mainstay.
4. Yes Bank provides financial and risk management solutions to corporates, MNCs, central and state governments; advisory services for mergers & acquisitions, divestitures private equity, foreign exchange and derivatives solutions.
Financials
1. Yes Bank’s net profit more than doubled in FY08, driven by rising net interest margin (NIM) and
expanding balance sheet size.
2. Its NIM swelled by 44 basis points and stood at 2.74% for FY08, on account of higher retail banking activity.
3. The bank’s strategy is to increase its number of retail branches to 250 by FY10, thereby increasing access to CASA deposits. These are a cheaper form of funding and help to increase the NIM.
4. Currently, a very small portion of the bank’s deposits are of CASA type. At the end of FY08, CASA deposits accounted for 8.5% of its total deposits, compared to about 40% for most other banks. The management had earlier indicated that it is targeting CASA of 25% and expects to improve NIM to 3.75% by FY10.
5. The bank’s balance sheet size increased by more than half to nearly Rs 17,000 crore as on March ’08.
6. Its credit-deposit ratio fell from 76.5% in FY07 to 71% in FY08.
7. The bank’s capital adequacy ratio (CAR) stands at 13.6%, while its non-performing assets (NPAs) are negligible. This indicates the operational efficiency of the bank.
Valuations
1. Yes Bank trades at a price-to-earnings (P/E) multiple of 24. This is on the higher side compared to the P/Es of public sector banks. However, PSU banks conventionally attract lower valuations on account of lesser flexibility due to government ownership. The scrips of the top two private sector banks in India — ICICI Bank and HDFC Bank — trade at P/Es of 22 and 32, respectively.
2. Being a relatively new player in the business, Yes Bank is on a much faster growth trajectory than its peers. It has been enhancing its presence in the retail banking space
Key Figures -
EPS (Q4 FY08) - 2.18 (Non-Annualized) - Annulaized - (2.18*4 = 8.7)
EPS (FY 08)(Diluted) - 6.75
CMP - 170 Rs.
P/E - 25
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