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I m sitting n thinking hard about life...
How it changed from simple college life 2 strict professional life
How pocket money changed 2 huge monthly paycheques.. But gives less happiness
How a few local jeans changed 2 new branded wardrobe...But less occasions 2 use them
How a single plate of samosa changed 2 a full pizza...But hunger is less
How a bike always in reserve, changed 2 a car always on, ...But less places 2 go
How a tea by roadside change 2 CCD, Barista... But it feels as if the shop is far away
How a limited prepaid card in mobile changed 2 post-paid package... But v don’t feel like using it
How a general class journey changed 2 flight journey...
But less vacations 4 enjoyment..n many more
May b this is d truth of journey called "LIFE"
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Beta 1.0 Institutional Holding 15.8% Dividend Yield 3.8% CMP Rs 129 Current Mkt Cap Rs 5,542 cr Current P/E 4.8
It is also one of the best-managed staterun banks in India. Its performance in the last three years, since it absorbed all its accumulated losses in its capital, is at par with best in its industry. Investors are advised to consider it for long-term investment.
BUSINESS
Headquarted in Chennai, Indian Bank is a leading bank in South India with widespread presence in Tamil Nadu, Kerala, Andhra Pradesh and Pondicherry. It was nationalised in 1969. It is a medium-sized bank and its balance sheet size stood at Rs 84,122 crore in FY 2009. It has 1,642 branches.
In the current decade, the bank has seen a turn-around. At the end of March 2000, bad loans, or net non-performing assets, formed 16% of Indian bank's net advances. In FY06 it absorbed all the losses in its capital, which fell to Rs 744 crore from Rs 4,574 crore in the previous year. Since then, Indian Bank's profit has grown at compounded annual growth rate (CAGR) of 35% every year, while its balance sheet has grown at a CAGR of 21%. This shows that it has enough reach and scale to leverage.
GROWTH DRIVERS
Indian Bank's performance is clearly a cut above most state-run banks, notorious for inconsistent performance that puts down investors. The bank has performed well on all quality parameters while maintaining an impressive growth rate, achieving a delicate balance that has eluded several of its peers.
For instance, its net interest margin (NIM) stood at more than 3.5% in last six financial years. The only banks, which can better Indian Bank on this count are Kotak Mahindra Bank, Federal Bank and HDFC Bank. Its return on assets (RoA), at 1.6% in FY 2009, was the highest across all banks.
Its bad loans formed less than 0.2% of its net advances at the end of the year. Only Punjab National Bank has better record than Indian Bank on this count. The composition of its lending portfolio is very much on the lines of other state-run banks: agriculture loans constituted 15%, SME loan formed 11% and corporate sector contributed 50% to total loan book.
That the bank's performance is superior despite similar lending profile shows the efforts being put in to choose the customers. The bank is expanding its presence. It opened 101 new branches in FY 2009.
VALUATION
Indian Bank is trading at a price to earning (P/E) multiple of 4.8 times. This is lower than the average of smaller banks that are no match to it in performance.
This indicates that the stock market is not giving premium to its performance. Moreover, the earnings growth is far ahead of P/E, which shows that the possibility of rise in stock price is much higher. In terms of price-to-book value P/BV), the stock is trading at close to 1, which is the average at which other banks are trading. Even based on P/BV, the bank is not getting the premium it deserves in terms of valuations.
We think it will be re-rated some time in future and therefore advise long-term investors to buy the stock at current levels.
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Famous quotes of Dhirubhai Ambani:
From beginning Dhirubhai was seen in high-regard. His success in the petro-chemical business and his story of rags to riches made him a cult figure in the minds of Indian people. As a quality of business leader he was also a motivator. He gave few public speeches but the words he spoke are still remembered for their value.
• "" With the force of 3million investors RIL will reap the title "World's Biggest Company"
*"Tax is for the poor or the stupid people." *"I am deaf to the word "no"."
• "Growth has no limit at Reliance. I keep revising my vision. Only when you dream it you can do it."
• "Think big, think fast, think ahead. Ideas are no one's monopoly"
• "Our dreams have to be bigger. Our ambitions higher. Our commitment deeper. And our efforts greater. This is my dream for Reliance and for India ."
• "You do not require an invitation to make profits."
• "If you work with determination and with perfection, success will follow."
• "Pursue your goals even in the face of difficulties, and convert adversities into opportunities."
• "Give the youth a proper environment. Motivate them. Extend them the support they need. Each one of them has infinite source of energy. They will deliver."
• "Between my past, the present and the future, there is one common factor: Relationship and Trust. This is the foundation of our growth"
• "We bet on people."
• "Meeting the deadlines is not good enough, beating the deadlines is my expectation."
• "Don't give up, courage is my conviction."
• "We cannot change our Rulers, but we can change the way they Rule Us."
• "Dhirubhai will go one day. But Reliance's employees and shareholders will keep it afloat. Reliance is now a concept in which the Ambanis have become irrelevant."
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