The Banking sector

Message

Originally posted by basant

Originally posted by omshivaya

Uhmm, not till now. The problem is until next 1 year I cant sell any more stocks, else I shall have to pay capital gains tax. So whatever I look into, has to be a year from now. I shall look for a more than 50% CAGR(for 2-3 years) company 1 year from now and shall post this question in Nov, 2007 I guess. LOL!

The moment you let taxes determine your strategy you move away from taking the most sppropriate decision leading to lower profits so I suggest sell and buy stocks without looking at the tax aspect.

Basant ji, I agree with you. But the problem is that the capital gain is quite  a lot as one of the big holdings recently gave bonus shares of 1:1. So half of the current value of the entire investment in that stock would come under tax(as the purchase price of bonus shares are assumed as nil and hence they are totally taxable) and that is quite a significant amount. So I am holding onto them for 1 year. I just fee more comfortable doing that.

Also, in regards to Yes Bank: In the latest issue of Businessword, Yes Bank has been voted the 3rd best listed bank of 2006, just after HDFC(2 years continous) and ICICI Bank(From 4th to 2nd)

The parameters for the choice was as follows(equaly weightage to all):

1) Profitability(NIM, Net Profit/Total Income)

2) Efficiency(Return on Average assets, Profit per employee)

3) Safety(Net NPA to net advances, CAR)

4) Size(Total assets, Total income)

5) Valuation(Price to Book, Price to Earnings)

6) Growth(NII, Net Profit)

Only in valuation category, the PE was given lesser weightage than Price to Book. For all other categories, all sub-categories were given equal weightage.

Yes Bank ranked 6th on Profitability, 1st on Efficiency, 1st on safety, 32nd on size, 3rd on valuation, 1st on growth. Overall Yes Bank was 3rd.