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IDBI BANK
I have been holding 175 shares of IDBI Bank for more than two years now and am currently sitting on a sizeable profit. Is it the right time to exit? – Pramod Phanse, Via Email
| BSE/NSE Code | 500116/IDBI |
| Face Value | Rs 10 |
| CMP | Rs 74 |
| 52-Week high/low | Rs 118/Rs 66 |
| Current Profit/(Loss) | NA |
The economic growth of the country is the right indicator of the health of its banking sector. As the RBI is set to issue banking licences to some more financial institutions, there will be increased competition in the sector. Both public and private sector banks will have to keep up with this pace. It is necessary to consider this backdrop apart from looking at the company individually before taking a call on your investment. Here is a profile of IDBI Bank along with its financial performance.
IDBI Bank offers banking and financial services to retail and corporate clients primarily in India. The Bank offers personalised services to its clients in the retail and corporate banking arena through its large network of branches and ATMs, spread across the length and breadth of India. As of FY13, the bank operates through a network of 1077 branches and 1702 ATMs. The bank has a presence in Dubai and has also initiated the process for setting up branch offices at Singapore and a representative office at Shanghai.
On the financial front, the bank has witnessed moderate results for Q4FY13. It posted a net interest income (NII) of approximately Rs 1440 crore for Q4FY13, which is up by 19 per cent as compared to Q4FY12. The total interest income of the bank increased by a mere 5.2 per cent on a yearly basis to stand at Rs 6396 crore. The reason for this is attributed to slower growth in advances which grew by 8.4 per cent on a yearly basis. The net interest margin (NIM) of the bank for Q4FY13 stood at 2.19 per cent, which is down by eight basis points on a sequential basis. However, the asset quality of the bank improved sequentially. The net NPA for Q4FY13 stood at 1.58 per cent as compared to 1.61 per cent for Q3FY13 and 1.93 per cent for Q4FY12. The board of the bank has also proposed a dividend of Rs 3.5 per share, which gives a dividend yield of 4.72 per cent at the current share price of Rs 74. Currently, the IDBI bank is trading at a price to book value of 0.7x which looks attractive but looking at the deteriorating return on assets (ROA) of the bank (from 0.81 per cent for FY12 to 0.69 per cent for FY13) and higher GNPAs and NNPAs, they are likely to restrict any spurt in the share prices as of now.
Hence, we advise you to book profits in the counter.
ALLCARGO LOGISTICS
I have bought 90 shares of this company at Rs 135 per share. Should I continue to hold these or exit the counter? - Neeta D’Souza, Via Email
| BSE/NSE Code | 532749/ALLCARGO |
| Face Value | Rs 2 |
| CMP | Rs 93 |
| 52-Week high/low | Rs 152/Rs 88 |
| Current Profit/(Loss) | (31 per cent) |
You should have raised a question regarding your investment in this stock slightly earlier, considering that is now trading at a huge 31 per cent discount to your purchase price. Let us take a look at this company’s financials.
Allcargo Logistics provides integrated logistics solutions in India and internationally. The company offers project and engineering solutions comprising project logistics, engineering, and forwarding; ODC and heavy lift planning and execution. The company currently operates out of 189 owned offices in 89 countries and gets supported by an even larger network of franchisee offices across the world.
On the financial front, the company has posted muted results for FY13. The topline witnessed a decline of 8.10 per cent on a YoY basis for FY13 to stand at Rs 3925 crore as against Rs 4271 crore for FY12. The bottomline witnessed a decline of 40 per cent on a YoY basis for FY13 to stand at Rs 169.74 crore as against Rs 284 crore witnessed in FY12. The drop in its bottomline can be attributed to higher total expenses (including depreciation). The total expenses as a percentage of total income had witnessed an upmove of 375 basis points on a YoY basis to stand at 94 per cent for FY13. However, on the valuation front, the stock is trading at a PE of 6.86x while its EV/EBITDA stands at 3.23x. Although it looks attractive on the valuation front, the stock has been witnessing a southward journey in the absence of any future projections. We would thus suggest that it would be better for you to exit the stock even if you have to book losses.[PAGE BREAK]
BAJAJ FINANCE
I am holding 100 shares of Bajaj Finance and the stock is trading at a 20 per cent premium to my purchase price. Should I book profits? - G Krishnan, Via Email
| BSE/NSE Code | 500034/BAJFINANCE |
| Face Value | Rs 10 |
| CMP | Rs 1439 |
| 52-Week high/low | Rs 1595/Rs 925 |
| Current Profit/(Loss) | 20 per cent |
The adjoining query regarding IDBI bank throws some light on the banking sector in India and the likely scenario going ahead. Bajaj Finserv, of which Bajaj Finance is a subsidiary, is one of the 26 applicants to the RBI for the new banking licence. Whether or not the RBI allows it to float a bank is to be seen. At the moment, let us study the current financials of the company.
Bajaj Finance operates as a non-banking financial company in India. It offers various consumer financing products and services, including consumer durables finance, lifestyle finance, EMI card, personal loans cross sell, co-branded credit cards, two and three wheeler finance, and salaried personal loans. The company was formerly known as Bajaj Auto Finance and changed its name to Bajaj Finance in September 2010.
On the financial front, the topline witnessed growth of 36 per cent on a YoY basis for Q4FY13 to stand at Rs 780.29 crore. The bottomline grew by 52 per cent on a YoY basis for Q4FY13 to stand at Rs 163.81 crore. The disbursement of loan has witnessed a growth of 21 per cent on a YoY basis to stand at Rs 5106 crore. This has been better than that of the industry average of 14 per cent as far as credit growth is concerned. The net interest income (NII) witnessed growth of 33 per cent on a YoY basis for the recently concluded quarter to stand at Rs 517 crore. During the quarter, the gross non-performing asset (NPA) ratio rose marginally to 1.09 per cent as against 1.05 per cent a year ago. The net NPA ratio stood at 0.19 per cent as compared to 0.12 per cent during the same period. The stock is trading at a price to book value of 2.52x. We suggest that you book partial profit of atleast 25 per cent of your portfolio and stay invested in the rest to garner better returns.
CUMMINS INDIA
What should I do with this stock at the current levels? - Atul Sheikh, Via Email
| BSE/NSE Code | 500480/CUMMINSIND |
| Face Value | Rs 2 |
| CMP | Rs 448 |
| 52-Week high/low | Rs 542/Rs 415 |
| Current Profit/(Loss) | NA |
The automobiles industry has been facing trouble on a number of fronts right now – fuel prices, inflation, customer sentiment and interest rates are some of them. The industry has been performing poorly since some time now and the upcoming quarterly results are not expected to be any better.
The industry has been performing poorly since some time now but Cummins India, which is involved in the manufacturing of engines, has been somewhat insulated from this slowdown. Let us take a look at the company's core business and what its financial performance points at.
The company engages in the design, manufacture, distribution, and service of engines, generators, and related technologies primarily in India. Cummins' presence in India stems from a joint venture incorporated in 1962. In 1997, Cummins Inc. increased its stake to 51 per cent. The Group spans 200 locations in the country and employs close to 14000 individuals.
The company has witnessed better results in FY13. The topline witnessed an upmove of 11.27 per cent for FY13 to stand at Rs 4509 crore as against Rs 4052 crore for FY12. The bottomline witnessed growth of 29.23 per cent for FY13 on a YoY basis to stand at Rs 764 crore as against Rs 591 crore for FY12. On the margins front, the company has fared quite well as both the operating and the net profit margins expanded by 288 basis points and 228 basis points on a YoY basis for FY13. The company’s stock is trading at a PE of 16.14x and the EV/EBITDA stands at 11.13x. At this juncture, you may consider entering the stock in a staggered manner keeping in mind the present volatile state of the markets.