IDBI Bank at Rs 153….Yet Lovely for all Risk Profiles and Portfolios

On September 8,2010 I recommended IDBI Bank at Rs 134…it had been on my radar for sometime and the Scriptech Stock Select committment was made as a Scriptech Sparkle SS 2 Stock Select…..It has done well past two trading weeks and soared to Rs 153….It suits all Portfolios and all Risk Profiles even at Rs 153

Just reproducing an extract from the Scriptech Recommendation Template of Wednesday,September 8,2010 for all of you

 

A SCRIPTECH SPARKLE SS 2 STOCK SELECT

 

IDBI BANK  at Rs 134 (FV Rs 10)

 

A BANK STOCK THAT WILL GATHER MOMENTUM 

 

Target Share Price Ranges over Time

 

 Inside 12 Months : Rs 175 – Rs 200…min 30%

Inside 24 Months : Rs 200 – Rs 250…min 50%

Beyond 2012 : Beyond Rs 250…90 % +

 

Downside Risk : Rs 110…@ 15%

 

SENSEX : 18667     NIFTY : 5608

 

 

When IDBI,the earlier avtaar,of IDBI Bank launched it’s IPO in 1995 at Rs 130 I had then said IDBI stood for ‘INSTANT DEATH BY INVESTMENT’….the issue was bailed out by UTI…it was a classic quid pro quo….UTI subscribed to IDBI and IDBI in what appeared to be  pre-arranged gratitude invested Proceeds in UTI Units !…IDBI collapsed to levels of Rs 30 in the years after the IPO

IDBI continued to receive oxygen from the Union Budget through Grants…Then in 2004 it merged and morphed into IDBI Bank and the future began to beckon

IDBI Bank,the new avtaar from 2004, is now past Rs 130 today and looking good for the coming years…It’s commenced an aggressive thrust to increase retail accounts in an attempt to to increase CASA Ratio and lower it’s cost of Funds…It’s new ads show this thrust…No Minimum Balance required…No Charges on many banking services like ATM,Funds Transfer and DD because as they assert to the client “you mean more than your money”

When IDBI and IDBI Bank merged in 2004,there was a mismatch  of working culture and mindsets that thwarted aggressive growth…Yet in the past two to three years it’s grown reasonably well…The momentum is set to intensify going forward

March 31

2006

2007

2008

2009

2010

 

EPS (Rs)

7.8

8.0

10

11.9

14.2

B V (Rs)

88

86

94

103

114

BV inc RR (Rs)

88

115

122

130

140

Div (%)

15

15

20

25

30

Rs Crs

 

 

 

 

 

PAT

561

630

729

859

1031

Equity

724

724

725

725

725

Free  Reserves

5648

5512

6075

6720

7502

Reval Reserves

2064

2022

1980

1938

Networth

6372

8300

8822

9424

10165

Deposits

26001

43354

72998

112401

167667

Borrowings

47530

42404

38613

44417

47709

Advances

52739

62471

82213

103428

138202

Investments

25351

25675

32803

50048

73345

FY 11 should see the EPS move past Rs 17 and Book Value move past Rs 155 as PAT moves past Rs 1250 crs and Networth after Dividend adjustment moves towards Rs 11200 crs…It’s had a muted Q1 FY 11 notching Rs 250 crs PAT at June 30,2010

IDBI Bank has spurted to close at Rs 134 today…yet at under Eight Earnings and under One Book….step brotherly treatment meted to it in relation to better multiples to it’s peers…probably guided by concerns on lower NIM,higher NPA Levels and muted growth   

There could be a likely dilution of Equity as the bank raises funds for expansion  

The Bank is present across Investment and Commercial Banking,Broking,Investment,Mutual Fund and Insurance(JV with Fortis) Spectrums read more