IDBI: Enough Margin of safety
Printed From: The Equity Desk
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Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=308
Printed Date: 28/Jun/2024 at 7:28am
Topic: IDBI: Enough Margin of safety
Posted By: nav_1996
Subject: IDBI: Enough Margin of safety
Date Posted: 10/Sep/2006 at 12:15pm
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Dear Basant,
Can IDBI double from here in an year? 1. Quoting at 40% discount to Book Value. 2. Good IT infrastructure. 3. Foray into new areas like online trading, insurance. 4. Share of low-cost funds going up. 5. NPA at reasonable levels. IDBI looks like the way ICICI was in beginning of this decade. Concerns are: 1. Low Net Interest Margins and return on equity. But likely to improve from here. Personally I like opportunities with good margin of safety. This gives me conviction to take large bets. Thanks Nawendu |
Replies:
Posted By: basant
Date Posted: 10/Sep/2006 at 12:43pm
You surely have a compelling argument but ICICI grew because of Kamath and those bright ladies (Morparis, Gupte etc). Not so sure on IDBI but yes, the safety element screams. Is the Book value NPA adjusted?
The results do look impressive. We would ignore looking at the RoE sincethe company is trying to get its act together.Otherwise a PE of 8 for a company engaged in http://www.theequitydesk.com/forum/forum_posts.asp?TID=247 - Retail banking is impressive.
It looks like a great bet! I would back you on this and if there is anything wrong it appears discounted in the price.
At a market cap of US 1 $ billion just see the kind of reach, infrastructure and brand that we are getting. That is about the same value that the market has assigned to many of these textile plays which would have been under debt from IDBI. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 10/Sep/2006 at 10:45am
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Another concern I had was that recent profits(almost 50%) have come from sale of investments which is not sustainable. They need to improve their NIM quickly.
They also have stake various state infrastucture development corporations which is still at par in their balance sheet as per RBI directive but I guess these will need to be written off in future as most of these entities are defunct or their net worth totally eroded. But I am assuming that these should be compensated by other investments when they are marked to market. It is difficult to get these details and quantify as it is not in their annual report. |
Posted By: basant
Date Posted: 10/Sep/2006 at 10:54am
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Yes, I went through the same but it does not get reflected there.At one point in time RJ was very bullish was this stock but that was last year.Once we get the NPA Adjusted BV things would be very easy it can be worked out also but I do not want to do this exercise as we may miss out something that si quite relevant. Deducting from the networth the NPA portion and then dividing it by numebr of shares.
The adjusted BV will capture everything and I have found it the better way to evaluate Banks/FI's . In these industries the PE reflects little. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 12/Sep/2006 at 10:56pm
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Basant,
How will UWB's merger with IDBI impact IDBI. -ve is that IDBI is paying 28/share but +ve is that it gets to double its branches. I guess considering size of IDBI's balance sheet, it should not have any material impact on IDBI's financials. Thanks Nawendu |
Posted By: basant
Date Posted: 12/Sep/2006 at 11:22pm
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I have not studies that in detail but I would go with your assesement. UWB market cap at Rs 115 crores is 3% of IDBI's so even if all of that Goes down the drain IDBI shall recover the money in one year of operation.
The markets may take oit negatively but to me it does not matter or for a long term investor could be beneficial since it gives IDBi a head start.
I am not sure how UWB's book value is reflected at rs 62 maybe it has not been adjusted for the NPA's! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 12/Sep/2006 at 11:46pm
I think you are correct this BV is not adjusted for NPAs. Adujusting for Net NPAs BV should be around 21 to 22. That is what market is pricing it at. Markets do get efficient 
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Posted By: deveshkayal
Date Posted: 12/Sep/2006 at 12:03pm
| Pradeep Bavnani(not sure if surname is correct) made a fortune by investing in UWB(15% stake) Shares when it dipped sharply after a moratorium announcement and with Rs 28/share by IDBI he maybe on the list of greatest investor correct me if made a mistake |
Posted By: kulman
Date Posted: 12/Sep/2006 at 12:16pm
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You are very much right. The circuit on stock was lifted on that day and it dipped 52%. As per my information his stake is around 10%, anyway its a smart move. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 12/Sep/2006 at 12:19pm
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I do not remember the name but this is the same guy who lost about Rs 4 crores by buying Global trust bank shares when they dipped? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prosperity
Date Posted: 12/Sep/2006 at 12:43pm
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Why does IDBI want to increase its liabilities ?
1) Taking up Restructuring of LML which has its networth wiped out !
2) Giving 28 Rs per share to UWB shareholders
NIM was already BAD .. In a manner to be "heroic", this bank collects liabilties ..
I wish i could long-term short this bank
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Posted By: omshivaya
Date Posted: 12/Sep/2006 at 1:33am
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I think that IDBI and RBI must be knowing something that we don't else why would this deal go thru. I dont think they would do it just to be heroic? What do you think prosperity. Definitely they must be seeing some value in the amalgamation, in the long-term. ?? ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: nav_1996
Date Posted: 13/Sep/2006 at 3:31pm
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I have analyzed long term impact and I find it +ve. Imagine adding 200+ branches in largest loan market that too when IDBI just has 195 branches through out India.
It seems market has given Thumbs Up to this deal. |
Posted By: basant
Date Posted: 13/Sep/2006 at 3:38pm
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In Banking IDBI had no presence in Maharashtra and imagine getting present in about 200 locations at 3% of market cap the company is doubling its branches. Nawendu jee you need to be congratulated and I think over the next 2 years IDBI should more then double from here. Generally investors would talk in terms of NPA's etc but that is just a one year phenomenon. IDBI could write it off and recover the money in 2 years. Imagine what happens after that.
My experience shows that events like these are short term negatives / mildly positive but think about some one who is holding the stock in 2008.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 13/Sep/2006 at 2:03am
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Dear Basant,
Thanks for your compliments. Just saw ICICI securities sell recommendations on IDBI based on UWB's poor finacials and branches. Now this is a classical conflict of interest. While parent ICICI was first to throw its hat in the ring, ICICI securities comes out with a sell. I wonder why they did not suggest same to their management. No wonder organisations like Fidelity are respected as they are only asset management company and always on only one side of the table unlike these financial institutions. -Nawendu |
Posted By: kulman
Date Posted: 13/Sep/2006 at 2:47am
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I have learnt the hard way by believing brokerage reports. These are to be taken as only academic guidance.
I saw another BUY report by DSP ML on IDBI.
These "analysts" could convince you both ways by crunching numbers & presenting it in the fashion their major clients want it.
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This was told to me by a senior person of a major Investment Bank:
Let me give you hypothetical example of the modus operandi:
Broker "A" has a big FII Client "B" who wants to offload large quantity of INFY at a target price of say 1850 to 1900. But if "B" puts a sell order and market gets whiff of it, INFY would tank. So, "A" circulates a STRONG BUY report to all its clients. Initially, "B' also buys some quantity to boost the price, rumour mills/chat rooms are abuzz with "FII buying interest!!". Interest is generated and uninformed investors fall prey to it, then "B" slowly and steadily offloads desired quantity at desired price range. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: nav_1996
Date Posted: 12/Nov/2006 at 9:53pm
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It was good to see IDBI results. They have turned NIM +ve this Q. That means their core banking operations are in black. I hope they are able to grow their retail deposits quickly to improve NIM further.
Does any one use their IDBI Paisabuilder online trading? Any news on their Insurance business? |
Posted By: nav_1996
Date Posted: 25/Nov/2006 at 11:23pm
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Punjab National Bank has decided to offer idbiPiasaBuilder platform to their demat customer for online trading.
Their insurance venture with Fortis will be operational by mid-2007. |
Posted By: nav_1996
Date Posted: 25/Nov/2006 at 11:26pm
| It looks like Bank of Rajsthan has also chosen idbipaisabuilder. |
Posted By: tusharutuja
Date Posted: 26/Nov/2006 at 10:55am
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Don't know how many of you are a customer of IDBI, hence I thought of putting that perspective as well. It always helps to analyze a bussiness from a customer's perspective. By this you will know whether the bank will penetrate deep or not. * Recently IDBI has been hapazardly charging all sorts of fee incomes to all its customers. * Transactions like internet transfer (credit as well as debit) are charged * U request for a duplicate PIN and these guys u 100 bucks! * U get a ECS payment (refund of IPO/mutual funds) and these guys charge u even on these * The bank Housing finance division is also a big mess. They give flexi loans which do not have any benchmarks (usually there are PLRs for other banks) - finally raising loan rates that go above tolerence levels. * Quite a few industry analysts like Sucheta Dalal have questioned the banks intensions on the hapazard fee income structures - remember RBI advices banks to give these services free of cost! The bank looks good from a valuation perpective but suffers from terrible management. They are not in the countries top 3 private banks by market share and by taxing the custmors by all means they hav developed a bad reputation. I strongly think that unless the bank changes its attitude they might not be able to penetrate and make a mark in this already competitive indian banking industry. |
Posted By: xbox
Date Posted: 26/Nov/2006 at 11:49am
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I keep my self away from Govt controlled financial institutions. With more flexibility give in financial sector, one must avoid these rigid, non-customer friendly, non-aggrasive banks/institutions. Atmost they can be punter's call. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: nav_1996
Date Posted: 08/Jan/2007 at 5:30pm
| This may interest some of you who want a play on Exchange holdings. IDBI is one of the largest promotores of NSE and this does not reflect in their book value. IDBI is also promoter of NSE sister concern NSDL. |
Posted By: basant
Date Posted: 08/Jan/2007 at 6:04pm
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That is really interesting any idea what percentage IDBI holds in the exchange and depository. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 08/Jan/2007 at 6:50pm
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As per Macquaire, IDBI holds 7.5% in NSE which they value at Rs 9/share. Interestingly they are negative on stock and have a target price of 65.
NSDL is promoted by NSE, UTI and IDBI. No idea about % holding. |
Posted By: nikhil090
Date Posted: 08/Jan/2007 at 7:24pm
| On a value perspective IDBI will become cheap if we add up all the holdings which they hold in different companies and the loan book.. It would be interesting to look at investments in balance sheet of the company. BUt again, when will that value be realised?? |
Posted By: nav_1996
Date Posted: 08/Jan/2007 at 9:00pm
| Nikhil, do you have details of their investments? |
Posted By: nav_1996
Date Posted: 09/Jan/2007 at 11:47am
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Some value unlocking to happen soon.
From myiris: After a much speculation over the possible buyouts in Indian stock exchanges like BSE and NSE, the news that US-based global investment banking giant Goldman Sachs and the New York Stock Exchange (NYSE) buying a 26% stake in National Stock Exchange (NSE), only comes as a breather, reports Economic Times. IL&FS and IFCI are selling 5% each of their holdings in the exchange to Goldman Sachs and NYSE in two separate deals, which are expected to be signed soon. The two shareholders currently hold 7.1% each in the exchange. IDBI and ICICI Bank, the two other institutional promoters, are also expected to offload part of their holdings in the exchange in subsequent deals, according to sources. The valuation of the NSE is expected to be over USD 2 billion. |
Posted By: nikhil090
Date Posted: 10/Jan/2007 at 6:28pm
| The details of investment are not available in their annual report.. May be they keep it hidden.. But I feel that at 6000 cr, the value is definitely there.. There would be whole host of companies in which IDBI will be having stakes, plus their normal business .. But the question is when the value gets unlocked completely and would they be serious competitor in banking/DFI busines?? |
Posted By: nav_1996
Date Posted: 10/Jan/2007 at 8:40pm
| 6000 cr is lot. That is only slightly less than their market cap approximately. I think they are making some quick moves with offering idbipaisabuilder platform to other banks, launching of insurance company, take over of UWB etc. I guess current management is making right moves. They also selling their investments in phased manner adding to their BV. Also, they may be trusted with a huge chunck of Govt pension plans getting them sizeable steady fees income. |
Posted By: nav_1996
Date Posted: 13/Jan/2007 at 10:00pm
| IDBI also holds 3.1% in IDFC. |
Posted By: nav_1996
Date Posted: 16/Jan/2007 at 12:22pm
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Some very positive news from IDBI
--------------------------------- The IDBI Bank will kick-start its insurance joint venture and Rs 1,000-crore private equity fund business within the next three months. The public sector major has also scheduled its re-entry into the mutual funds business for the latter part of this year even while awaiting Parliamentary clearance for the Pension Fund Regulatory and Development Authority (PFRDA) Bill before making a move in the pension fund segment. While the mutual funds business will be conducted by the bank along with IDBI Capital Markets Ltd, the insurance business will involve Fortis Insurance International NV and private sector lender, Federal Bank. Outlining the future growth plans of the bank, a senior IDBI official said that the bank will shortly launch a Rs 1,000-crore private equity fund focusing on Small and Medium Enterprises (SMEs) and companies in the turnaround mode. "While RBI approval for the fund is awaited, our board has cleared the proposal to set up the fund," the official said. The bank is bullish on its insurance business in which it holds a 48 per cent stake followed by Fortis and Federal Bank with 26 per cent stakes each. ------------------------------------------------------- Real trigger will be managing pension funds. Government is going to hand this over to only PSUs to keep coalition partners happy. Front runners are SBI, IDBI, UTI etc. |
Posted By: nav_1996
Date Posted: 18/Jan/2007 at 9:59pm
| IDBI reached 100 today. It seems market is dicovering the value of IDBI assets. |
Posted By: basant
Date Posted: 18/Jan/2007 at 10:28pm
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Yes, the sale of stake in NSE has stirred the whole sector. Now people would start analysing companies on the basis of realisavble investments. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kulman
Date Posted: 18/Jan/2007 at 10:47pm
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Yes, even there was flash news about ICRA stake sale by IFCI. Now ICRA is a credit rating agency like Crisil.
Does IDBI also have stake in it (ICRA)?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: PrashantS
Date Posted: 18/Jan/2007 at 11:52pm
| but are these companies good for long term.....but we canhave a section for analysing these stocks..to milk some profits....and reinvest in our good stocks..... |
Posted By: basant
Date Posted: 18/Jan/2007 at 8:50am
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To me these are opportunities for a season. If the assets were so valuable why was the market sleeping for 4 years? Once the stock price comes closer to the NAV(which itself is indetermined) the rally should be over.The trick is to 1) Analyse the NAV first.
2) Predict when they would be sold off
3) Wait for these companies to get the best price for these investments.
I think that the process itself is indefinete and while you could have made some decent money buying IFCI in December 2006 think of someone who would have bought the stock in December 2004. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 20/Jan/2007 at 1:37pm
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Read on Moneycontrol Message Board. Figures may not be accuarate but gives an idea of IDBI's holdings. IDBI seems to becoming a good value+growth play
-------------------------------------------------------- Fact and figures …. Equity Rs 724 crs Net profit of Rs 560 crs Investments at book value Rs 25350 crs, in Govt Securities Rs 16500 crs cash Rs 2600 crs investment in shares Rs 2400 crs. Public holding is 14% whereas FII holding is just 13% leaving enough scope for going for a kill in this stock on events unfolding. IDBI and Fortis Insurance International N. V. (Fortis), one of the largest players in the insurance business in Europe, have signed a Memorandum of Understanding (MoU) with a view to setting up a Joint Venture (JV) in the field of Life Insurance business. Apart from its European operations, Fortis has also set up a number of Life Insurance JVs in other countries in Asia. Fortis will bring to the joint venture its unique experience in developing and operating the bancassurance model, which will augment the activities. A third partner will be identified jointly which would bring further strength to he distribution channels, retail client base and also would satisfy the statutory and regulatory requirement. In terms of extant Guidelines of the Reserve Bank of India, the entire investment portfolio is categorised as "Held to Maturity"," Available for Sale" and "Held for Trading". The investments under each category are further classified as i) Government securities ii) other approved securities iii) Shares iv) Debentures and Bonds v) Subsidiaries / joint ventures vi) Others (CP, Mutual Fund Units, etc.). What we understand that IDBI is holding following investments though it’s Balance Sheet does not give details of investments…… 25% stake in NSDL ( 20 lac shares) Majority stake in SIDBI 17% stake in NSE 18% stake in Stockholding Corporation ( 38 lac shares ) 28% stake in IFCI ….( 18 cr shares) 12 other Govt companies where IDBI has stake which is as of date which can’t be enchased Need to find out IDBI value…. understand that Finmin has issued a letter of intent to IDBI to sell 15% its 25% stake in NSDL, majority holding in SIDBI, at least 10% from NSE and entire 18% in Stockholding Corporation to raise sizable funds to meet the growing requirement of infrastructure requirement. NSE stake is now openly valued at Rs 2400 crs i.e Rs 35 per share ……A NSDL is valued at Rs 800 crs on rough estimates and 15% dilution could mean Rs 110 crs in the hands of IDBI i.e Rs 1.50 per share………B Equity is Rs 8 crs Res 12 crs, profit Rs 2.9 crs, Stockholding Corporation Ltd Equity Rs 21 crs Reserves Rs 151 crs, PAT Rs 23 crs, It holds 3199998 shares of NSE which is currently valued at Rs 800 crs It handles more than 1 mn d-mat accounts. Govt of India recently awarded e-stamping contract to Stockholding Corp after Telgi scam which is estimated roughly in the range of Rs 1.8 to Rs 2.5 lac crores on which a fees of .60% will be awarded to Stockholding Corporation. This will add Rs 10000 crs to the bottom line of Stockholding. This is discussed because we need to understand the value of Stockholding at which Govt may ask stake sell. Based on the same value IDBI will get its return. Rs 400 alone works out for NSE stake whereas on conservative estimate Rs 1000 per share could fetch for other investments. 38 lac shares into Rs 1400 per share works out to Rs 500 crs in the hands of IDBI. Rs 7 per share…………………………….C 18 cr shares of IFCI could fetch at least 540 crs to IDBI which is around Rs 7.5 per share…………………..D Sum of A, B, C and D works out to Rs 51 per share whereas cash is already there Rs 30 plus in the Balance Sheet. It means IDBI is available at Rs 16 per share minus cost of investments and life insurance biz coming into. suggest buying into IDBI with a target price of Rs 150 in next 6 months as investments itself will fetch Rs 50 to 60 per share whereas business valuations should offer Rs 100 per share for the largest Industrial Financial Institution. Valuations of 12 unlisted Govt firms are not counted along with insurance biz and therefore the aforesaid working should be considered only as guidelines and conservative and more updates will be released as and when more data will be gathered. |
Posted By: nav_1996
Date Posted: 21/Jan/2007 at 10:40pm
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From Business Standard
---------------------- IDBI mulls stake sale in institutions Ashutosh Joshi / Mumbai January 22, 2007 IDBI is exploring the option of selling its stake in premium institutions such as the National Stock Exchange (NSE), National Securities Depository (NSDL), Small Industries Development Bank of India (Sidbi) and Stock Holding Corporation of India (SHCIL). Enthused by big profits raked in by IFCI (Rs 779 crore for 7 per cent stake) from its stake sale in the NSE, the market buzz is that IDBI is a strong contender for selling its stake in the premier bourse. When contacted, IDBI Chairman V P Shetty said, “It’s too premature to talk anything in this regard.” The market buzz, however, refuses to die down, with the IDBI counter attracting big buying interest in recent days. The IDBI stock rose by a handsome 13.46 per cent to Rs 97.75 last week. After its deal with the NSE, the IFCI scrip was on fire and rose 142.44 per cent in a month to Rs 26.51. “Many financial institutions and banks are in the process of increasing their net worth by selling equity investments wherever they find good valuations,” investment banking sources said. ICICI Bank diluted its NSE stake and was in the process of finding buyers for its stake in other ventures, they added. IDBI has 18 per cent stake in SHCIL, 25 per cent in NSDL and around 10-15 per cent in the NSE and Sidbi. According to unofficial estimates, the company could earn nearly Rs 2,400 crore if it sells its NSE stake alone. The stake sale story is also unfolding at the ICICI Bank counter as well. In recent times, the country’s largest private sector bank was also seen selling stakes in various institutions – Federal Bank, the National Commodity & Derivatives Exchange (NCDEX), the NSE, among others. There is a buzz that ICICI Bank is also looking at divesting its stake in 3i Infotech gradually. Similarly, in the case of IFCI, the buzz is that the ailing Delhi-based financial institution could fetch another Rs 550 crore through an NPA recovery from Malvika Steel alone. |
Posted By: sanjay3
Date Posted: 24/Jan/2007 at 7:28pm
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IDBI launches new FD scheme with 8.75% interest rate
Mumbai, Jan 24: IDBI Bank has launched a 600 days term deposit scheme called IDBI Suvidha Plus Fixed Deposit Scheme (ISPFD) carrying an attractive interest rate of 8.75 per cent per annum. The scheme opens for subscription from January 25 and offers 50 BPS higher interest than its earlier version, the 500-day tenor FD scheme, IDBI said in a release here today. Eligible customers, including individuals, Hindu Undivided Families (HUFs), companies, trusts, NGOs, etc stand to earn good return on investment by parking a minimum amount of Rs 10,000 and in multiples of Rs 1,000 thereafter in the scheme, the bank stated. There is no cap on the quantum of funds that can be parked in the ISPFD scheme. Senior citizens will enjoy a higher interest rate of 9.25 per cent per annum on their investments in the scheme. Depositors in the new scheme have the choice of receiving interest payouts, either on a monthly or a quarterly basis. De osits, which run the full-term, will be eligible for quarterly compounding of interest while pre-mature withdrawal will attract a penalty of one per cent. Investors who deposit Rs 50,000 and above will enjoy a host of additional benefits including zero-balance savings bank account, an international ATM-cum-debit card, Internet banking facility, etc. All depositors can also avail of loan/overdraft facility against the ISPFD. Mumbai, Jan 24: IDBI Bank has launched a 600 days term deposit scheme called IDBI Suvidha Plus Fixed Deposit Scheme (ISPFD) carrying an attractive interest rate of 8.75 per cent per annum. The scheme opens for subscription from January 25 and offers 50 BPS higher interest than its earlier version, the 500-day tenor FD scheme, IDBI said in a release here today. Eligible customers, including individuals, Hindu Undivided Families (HUFs), companies, trusts, NGOs, etc stand to earn good return on investment by parking a minimum amount of Rs 10,000 and in multiples of Rs 1,000 thereafter in the scheme, the bank stated. There is no cap on the quantum of funds that can be parked in the ISPFD scheme. Senior citizens will enjoy a higher interest rate of 9.25 per cent per annum on their investments in the scheme. Depositors in the new scheme have the choice of receiving interest payouts, either on a monthly or a quarterly basis. De osits, which run the full-term, will be eligible for quarterly compounding of interest while pre-mature withdrawal will attract a penalty of one per cent. Investors who deposit Rs 50,000 and above will enjoy a host of additional benefits including zero-balance savings bank account, an international ATM-cum-debit card, Internet banking facility, etc. All depositors can also avail of loan/overdraft facility against the ISPFD. Mumbai, Jan 24: IDBI Bank has launched a 600 days term deposit scheme called IDBI Suvidha Plus Fixed Deposit Scheme (ISPFD) carrying an attractive interest rate of 8.75 per cent per annum. The scheme opens for subscription from January 25 and offers 50 BPS higher interest than its earlier version, the 500-day tenor FD scheme, IDBI said in a release here today. Eligible customers, including individuals, Hindu Undivided Families (HUFs), companies, trusts, NGOs, etc stand to earn good return on investment by parking a minimum amount of Rs 10,000 and in multiples of Rs 1,000 thereafter in the scheme, the bank stated. There is no cap on the quantum of funds that can be parked in the ISPFD scheme. Senior citizens will enjoy a higher interest rate of 9.25 per cent per annum on their investments in the scheme. Depositors in the new scheme have the choice of receiving interest payouts, either on a monthly or a quarterly basis. De osits, which run the full-term, will be eligible for quarterly compounding of interest while pre-mature withdrawal will attract a penalty of one per cent. Investors who deposit Rs 50,000 and above will enjoy a host of additional benefits including zero-balance savings bank account, an international ATM-cum-debit card, Internet banking facility, etc. All depositors can also avail of loan/overdraft facility against the ISPFD. http://www.zeenews.com/znnew/articles.asp?aid=349867&ssid=52&sid=BUS ------------- |
Posted By: basant
Date Posted: 24/Jan/2007 at 9:07pm
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High deposit rates are bad for Banks and good for the customers but I have never heard HDFC Bank lure customers with higher interest rates. heard on TV yesterday that SBI is facing a huge FD maturity in March and all Banks are eyeing those funds hence the rate war.Not that I believe in that logic but it did connect well with (after) the event. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: s_praharaj
Date Posted: 24/Jan/2007 at 10:24pm
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The demand for deposits with a higher rate of intt is because there is a great demand for loans in the market. Most of the bank's advances portfolio is showing 30-40% growth, where as increase in low cost deposit (Current, SB ) is less than 10%. Banks can only lend around 70% of their deposit. So the gap is filled with Term Deposits(FD,Cash Certicates etc.)
For the sake of information, Majority of Banks deposit base have 25-30% share of bulk deposits, which are accepted in a rate higher than the card rate (read normal rate for public.) The prevailing bulk deposit rate is as much as 10% . ------------- Shashi Praharaj |
Posted By: kulman
Date Posted: 24/Jan/2007 at 10:44pm
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: s_praharaj
Date Posted: 26/Jan/2007 at 2:36pm
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Kulmanji, Could you elaborate on LAF? What is it's significance?
LAF is short form for Liquidity Adjustment Facility.
It is a facility given by RBI, which is used by commercial banks for taking a short term recourse to meet their day-to-day mismatch in liquidity. Now there are two most used practices are "Reverse Repo" and "Repo" given by RBI which falls under LAF.
I will try to be very simple.
As per Govt guidelines the Banks are required to maintain at least 25% in Govt Bonds as part of their SLR. This 25% will naturally vary from one day to the other considering the vast commercial activities by Banks. Suppose a Bank has more than the required 25% SLR investment on a particular day, but it immediately needs fund for advancing some lons or any other activities where the returns are more than the rate it receives from the investment in SLR Bonds.In such a case the Bank will take advantage of "REPO" by which it will borrow money from RBI pledging the excess securities lying with RBI. Presently the repo rate is 7.25%.
In case the Bank is having excess funds and the Bank is not able to deploy it elsewhere where it can get more returns or in case a situation is there that at 3.30Pm in the afternoon the Bank realises that it has excess funds, then the bank can lend the fund to RBI through REVERSE REPO and can get atleast 6% from RBI. The Bank ofcourse can get more returns by deploying the excess fund in call money market or by linding to other Banks.
RBI has the right to change the Repo and Reverse Repo rate depending upon the market condition.
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****As the risk-free interest rate goes up, it is taught to us by Gurus that risk-premium on equities should actually reduce, i.e. PEs should contract. But what we are witnessing is different in India. What are the reasons?****
About the above point will you please be a little elaborate ? ------------- Shashi Praharaj |
Posted By: kulman
Date Posted: 26/Jan/2007 at 4:30pm
|
1. Thanks Shashi jee, as usual for your post about LAF. 2. About PE contraction due to rise in interest rates, nothing to do with banking industry as such or IDBI. This is a general query. We have seen upward re-rating of stocks due to low interest regime over the past 3~4 years. The question is with rising interest rates, how come there is no PE contraction now? And precisely for this fear, there was sell-off during May'06.------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: s_praharaj
Date Posted: 26/Jan/2007 at 5:25pm
|
Kulmanji, The high interest rate has not started yet. Yesterday only a big loan for a top industrial house was negotiated at 7.8%. Ofcourse it is a short term loan for 30 days.
But the way things are going, it seems the intt rate for corporates will rise from here onwards.
------------- Shashi Praharaj |
Posted By: kulman
Date Posted: 26/Jan/2007 at 5:30pm
|
But the way things are going, it seems the intt rate for corporates will rise from here onwards.
Precisely, would it mean we could see in not-so-distant future, re-rating of PE multiples for companies with high gearing/leverage?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 26/Jan/2007 at 6:03pm
|
re-rating of PE multiples for companies with high gearing/leverage?
_________________________________________________________
SHould be derating I presume but I do not think that anyone can make that call with a degree of surety. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kulman
Date Posted: 26/Jan/2007 at 11:05pm
|
Yes, in that case what I meant was PE contraction...derating. As regards your reply "I do not think that anyone can make that call with a degree of surety".....that's what makes markets in particular & life in general so interesting!!!
Uncertainty is the only certainty!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 26/Jan/2007 at 11:19pm
|
Additionally Kulman...markets generally have different ways of interpretting logic....
Expect the unexpected! ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 26/Jan/2007 at 11:28pm
|
You said 'logic'!? What's that?
Ask any Mungerilal........he would confirm that markets always behave illogically & irrationally!!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: vivek.650
Date Posted: 22/Jun/2007 at 6:14pm
|
IDBI is the best MIDCAP PSU bank. Technologically its much more advanced than other PSU banks. The work culture in this Bank is very good and Bank is doing very well on service parameters. The management has taken lot of initiatives to ensure that the Bank size grows without compromising on asset quality. It’s also concentrating on CASA accounts. The bank is bound to grow and this bank has good quality asset. This Bank book value is 95 Rs and this is trading at 1.07 FY08 Book Value which is very cheap for such a large Bank. It is estimated that the Bank is sitting on good amount of Real Estate at Chennai & various other places whose cost at current market price is 3200-3500 crore. The same has not been revalued on the Balance Sheet. The Bank is best prepared to face Basel II norms. In the PSU Banking sector this is the most undervalued stock. I see the stock matching Bank of India in the near future. Technology vendors like Oracle, i-flex, Infosys rate this Bank as the best PSU Bank in the context of Technology initiatives taken by this Bank. With its massive reach this would give necessary boost to the profits. Any more discussion on IDBI is welcome.Thanks. ------------- vivek |
Posted By: vivek.650
Date Posted: 02/Jul/2007 at 2:06pm
|
Since then,IDBI is appreciated 20 percent . Any say. I feel it should do well in comming days.Thanks. ------------- vivek |
Posted By: xbox
Date Posted: 02/Jul/2007 at 2:09pm
|
I think, it will actively participate in consolidation of PSU banks. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: Mohan
Date Posted: 07/Jul/2007 at 1:02am
|
IDBI's stake sale in NSE
only a part of its treasure 2007-06-29 15:51:58 Source : Moneycontrol.com
http://www.moneycontrol.com/india/stockpricequote/finance-term-lending-institutions/industrial-development-bankindia/15/53/IDB - Industrial
Development Bank of India , IDBI has major http://news.moneycontrol.com/india/news/market-edge/idbi-s-stake-sale-nse-only-part-its-treasure/05/30/289441 - - Even
after selling 2% stake in the NSE for USD 50 million (around Rs 200 crore), the
http://news.moneycontrol.com/india/news/market-edge/idbi-s-stake-sale-nse-only-part-its-treasure/05/30/289441 - - Apart
from that the bank has investments in SIDBI, NSDL, IFCI, IDFC, ARCIL and its
subsidiaries, which are valued at nearly Rs 3772.8 crore. According
KR Choksey report, “The bank has substantial amount of investments in listed
and unlisted http://news.moneycontrol.com/india/news/market-edge/idbi-s-stake-sale-nse-only-part-its-treasure/05/30/289441 - - - Valuations of few of the important investments of
IDBI
Note: * Market price of
IDFC and IFCI taken above for the calculation is Rs.121 and Rs.49.6
respectively as on June 21, 2007. (KR Choksey report) Company Description IDBI was set up as a
non-banking institution to provide project http://news.moneycontrol.com/india/news/market-edge/idbi-s-stake-sale-nse-only-part-its-treasure/05/30/289441 - - |
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Posted By: xbox
Date Posted: 07/Jul/2007 at 10:39am
|
Well!! If investment valuation is any criteria, SBI stands tallest of all. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: Mohan
Date Posted: 08/Jul/2007 at 7:25pm
|
Vipulji,
Please share with TED on SBI's investments valuations. Its the largest bank in the Public sector and I'm sure its stands head and shoulders above everyone else.
Thanks for bringing it up. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: dilip
Date Posted: 06/Sep/2007 at 12:49pm
|
can i buy IDBI and this level ? ------------- Dilip |
Posted By: nav_1996
Date Posted: 07/Sep/2007 at 3:45pm
| Marging of safety is gone. You may want to look at better options |
Posted By: basant
Date Posted: 07/Sep/2007 at 6:59pm
|
This one worked quite well for you. Guess you doubled your money in quick time and that too with conviction (greater percentage of portfolio). ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: nav_1996
Date Posted: 07/Sep/2007 at 9:08pm
| Thanks basant that you remembered. I exited around 100+ and entered long term plays like HDFC and ICICI with profits. To me they are classical value+growth+size financial institutions. |
Posted By: basant
Date Posted: 07/Sep/2007 at 11:05pm
|
More then making money in stocks it is the decision of allocating capital that makes money for us in the markets. I do remember all stocks that people talk or buy - diference between the two is significant because the first part indicates "idea" and the second "conviction". It is ironic that around the levels that you exited First Global released a report talking about Rs 200 as target price.Again that report indicated - that the brokerages are behind the normal investor.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: rakeshmehta48
Date Posted: 09/Feb/2009 at 8:43pm
|
It's almost one and half year since any post on this thread.
Any update on IDBI.
I understand that they were to sell their home loan division around Jan/Feb 2009 ------------- Fund Management is Most Important |
Posted By: nav_1996
Date Posted: 09/Feb/2009 at 11:37am
|
It is again reaching a point where we can look at IDBI. Do you have any idea about their loan book and NPAs? I have not tracked this since I exited this.
They have not been able to push their CASA and branch network is also not visible in larger cities unlike HDFC, Axis and ICICI. If you are looking purely at value with respect to BV, you can look at Bajaj Auto Finance. It is quoting at 0.2 BV. This can be a multibagger from here if they get their act together. There are some PSU Banks also at 0.5 BV. |
Posted By: 9StockPortfolio
Date Posted: 09/Feb/2009 at 11:43am
I and my colleague are shifting our home loans to IDBI from Kotak Mahindra. IDBI and it's strategy has been changed a lot in last 2-3 years. I can see aggressiveness in their work, closing deals with speed & minimum hassles for customer. Since merger with UWB it's branch network in Maharashtra has been improved. nav_1996, what is your take on IDBI these days? i am also monitoring it. I won't be adding it as i have AXIS bank in my portfolio since IPO in 1998. ------------- Pursuit of Value |
Posted By: manish_okhade
Date Posted: 10/Feb/2009 at 8:30pm
|
Btw IDBI has decided not to sell their home loan and plan to merge with IDBI Bank. Seems to be a time to relook at IDBI.
I am IDBI Home Loan beneficiary and i found the service as well interest rate variation at par with peers. Hope the same story with others too.
|
Posted By: nav_1996
Date Posted: 10/Feb/2009 at 9:17pm
| It is more of value unlocking. At max 3 bagger in next 2 years. Aggressiveness is not visible in numbers. |
Posted By: 9StockPortfolio
Date Posted: 10/Feb/2009 at 10:31pm
Manish, are you satisfied with IDBI bank's service? and Interest rates variations? ------------- Pursuit of Value |
Posted By: manish_okhade
Date Posted: 18/Feb/2009 at 5:44pm
|
1) I have taken the home loan 3+ yrs back and i am happy with the rate variation, i find it always at par with industry.
2) I have compared the FD interest rates, i find it at par with other banks.
3) I am satisified with the overall service. They look bit conservative in loaning procedure but i take it as plus instead of minus.
|
Posted By: manish_okhade
Date Posted: 18/Feb/2009 at 5:55pm
|
Bank has posted following profits still price is in free fall mode, why its not cheering the investors, is it a best value play to enter??
IDBI Bank Ltd has announced the following Unaudited results for the quarter ended December 31, 2008: The results for the Quarter ended December 31, 2008 The Bank has posted a net profit of Rs 2226.30 million for the quarter ended December 31, 2008 as compared to Rs 1758.40 million for the quarter ended December 31, 2007. Total Income has increased from Rs 24506.70 million for the quarter ended December 31, 2007 to Rs 35133.30 million for the quarter ended December 31, 2008. |
Posted By: studentoflife
Date Posted: 06/Mar/2009 at 6:40pm
|
Sir, I had opened an account with IDBI capital market.
There are couple of problems here :
1)Both IDBI bank and IDBI capital have facility of demat account,but the agent does not cleary earmark the difference.
In my case :
1)y savings account was with IDBI bank
2)Demat with IDBI capital
3)Trading a/c with idbi capital.
Now IDBI bank has very poor cordination with IDBI capital.
IDBI capital was 30 kms away from my place ..(Demat a/c)
IDBI bank 200 mts away.No clear communication of what is where.
It took a hell lot of time for me to demat my shares..:).
But the search facility in IDBI capital (stock screeners - good for vaule investors).But again that is overshadowed by old data.
|
Posted By: studentoflife
Date Posted: 06/Mar/2009 at 6:50pm
|
Since margin of safety with growth is an important parameter. What about Allahabad Bank?
This stock at a price of 40 gives a dividend of Rs 3.50.
P/E is 1.48.
NPA is on the higher side compared to other banks. 0.80 % of advances are NPA's but still is well within control and has reduced considerably.
Moreover it has reduced the last quarter profits because of government borrowing for Farmer loan(reason for stock being oversold)..but in the long run this will be added to the profits.
Year on year growth rate has been consistent.
This stock seems to be a multibagger considering such a cheap price.
|
Posted By: manish_okhade
Date Posted: 06/Mar/2009 at 7:14pm
| PSU Banks are a crowded mkt. Mostly all banks are available cheap. I am not expert but one should know the share dynamics of PSU Banks well before investing. |
Posted By: swagal
Date Posted: 12/Feb/2011 at 6:56pm
|
Experts can you please share your thoughts on IDBI from 2 years perspective. I mean do you see value at current levels and margin of safety. Thanks.
|
Posted By: barla
Date Posted: 12/Feb/2011 at 2:54am
|
this bank has simply no focus.
For a new age bank wiht governemnt controlo Axis is great.
For PSU bank there are better bets.
|
Posted By: rkgautam
Date Posted: 18/Aug/2011 at 2:10pm
| dividend yield upwards of 3%. higher growth potential from current levels (IDBI / Axis) or HDFC Bank? |
Posted By: koolvalue
Date Posted: 18/Aug/2011 at 2:26pm
CARE ratings IPO is expected soon.I think IDBI holds about 26% in CARE.Going by present valuation of CRISIL and ICRA CARE is expected to fetch a very good marketcap.Some people are expecting IDBI stake in can be valued between 600 crs to 1000crs. |
Posted By: shontou
Date Posted: 21/Oct/2011 at 11:37pm
|
Conference Call
IDBI Bank Expects NIM to be around 2.15% for FY12 IDBI bank came out with the financial performance for the quarter ended September 11 and conducted concall on 21 October 2011. P Sitaram – CFO addressed the call. Highlights of the call are: Business has inched up 16% to Rs 330358 crore for the quarter ended September 11 against Rs 284518 crore in the corresponding previous year. Total assets grew 11% to Rs 250392 crore at end of September 11. Advances grew 20% to Rs 155917 crore in quarter under review from Rs 130213 crore in the corresponding previous quarter. The management expects loan growth to be subdued at around 15% for FY12. Deposits grew 13% to Rs 174441 crore from Rs 154305 crore in the quarter ended September 10. Slower growth of 8% in the term deposits by 8% to Rs 140960 crore has led lower growth in deposits. The bank has reduced composition of bulk deposits in the term deposits to less than 65% at end of September 11. It plans to bring down the bulk deposits further below 50% in next 4-6 quarters. On the other hand, CASA deposits grew robust 42% to Rs 33481 crore. CASA ratio improved to 19.19% in quarter under review from 15.26% in the corresponding previous year. Yield on advances inched up to 10.19% against 9.10% in the corresponding previous year while that of cost of deposits inched up to 7.60% from 6.12% a year ago. Cost of funds spiked up faster at 8.40% against 6.70% a year ago. NIM stood declined to 2% from 2.24% in quarter ended September 10. The management has scaled down the target NIM of 2.2% for FY12 to around 2.15%. Capital Adequacy ratio (excluding half yearly profit) was 13.34% with tier I capital of 7.77% at end of September 11 against 14.17% with Tier I capital of 8.88% in the corresponding previous year. The bank requires further capital so as to aid the loan growth for FY12 but see no plans to rise in near term. The provisions and contingencies declined 27% to Rs 320.55 crore on a higher base as the bank has to provide higher provisions for creating counter cyclical buffer in order to reach 70% provision coverage ratio as stipulated by RBI in the quarter ended September 10. Asset quality of the bank has deteriorated in the quarter under review. Gross NPA has increased 57% y-o-y and 18% q-o-q to Rs 3889.45 crore in the quarter ended September 11. The slippages during the quarter were to the tune of Rs 925 crore while up gradations stood at Rs 127 crore, Recoveries Rs 106 crore and Written off Rs 91 crore. The Net NPA has also spiraled 58% y-o-y and 26% q-o-q to Rs 2442.87 crore in quarter under review. %GNPA stood at 2.47% in quarter ended September 11 against 1.88% a year ago and 2.1% a quarter ago. %NNPA also increased to 1.57% against 1.19% a year ago and 1.25% a quarter ago. The provision coverage ratio as per RBI guidelines stood at 70.05% at end of September 11. The outstanding restructured book at end of September 11 was to the tune of Rs 8860.05 crore, of which Rs 1503.16 crore slipped to NPA's. Investment book grew marginal 1% to Rs 69941 crore at end of September 11. Modified duration of total investment book is close to 6 years. Modified duration of AFS book is 2.3 years. The RIDF investments stood at Rs 2000 crore at end of September 11. The Bank was exempted to reach 40% Priority sector lending by end of FY13. ROE for the quarter stood flat at 15.58% against 15.59% a year ago. On the other hand ROA improved 0.84% from 0.77% in the quarter ended September 10. Management expects ROA target of 0.9% to be maintained for FY12. Book value per share has increased to Rs 137.04 at end of September 11 against Rs 121.87 in the corresponding previous year. ------------- Every day, self-proclaimed stock market "experts" tell us why the market just went up or down, as if they really knew. So where were they yesterday? |
Posted By: basant
Date Posted: 21/Oct/2011 at 1:20am
|
market sources suggest that RK Damani was very active on this counter enar about the Rs 150 levels. this was also Shankar Sharma's favourite stock a couple of years back. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: manish_okhade
Date Posted: 21/Oct/2011 at 11:17am
Do they [Sharma, RKD, RJ etc] act as a gang on BSE? I mean one shorts and other go long and vice versa :-) |
Posted By: koolvalue
Date Posted: 12/Dec/2012 at 1:27pm
Updating again for benefit of TEDIES who missed it earlier. CARE ratings IPO is expected soon.I think IDBI holds about 26% in CARE.Going by present valuation of CRISIL and ICRA CARE is expected to fetch a very good marketcap.Some people are expecting IDBI stake in can be valued between 600 crs to 1000crs. |