The Hindu Business Line : Rajasthan Bank: Some say it's hot, some not

IS the Rajasthan Bank stock a hot cake or a hot potato? Opinions of brokers and dealers are divided. Going by the counter's volume spurt in the major bourses on Wednesday, it appeared to be in demand.

The counter witnessed a traded quantity of 2.29 lakh (65,081) shares on the BSE and 5.31 lakh (1.36 lakh) shares on the NSE. After touching an intra-day high of Rs 39, it closed at Rs 37.35, up 0.4 per cent. Its 52-week high is Rs 45.

On the NSE, the stock attracted six large-size deals totalling around 90,693 shares and some 52.5 per cent of the traded quantity was placed for delivery.

However, some technical and fundamental analysts with broking firms were not convinced about the stock. "Technically, the stock has taken support at its 50-day moving average and did not appear to be in the midst of a rally," commented Mr Ajay Jaiswal of Lohia Securities. According to Mr Nikhil Thacker of Asit C Mehta Investment Intermediaries, the bank's NPAs are the biggest troublesome aspect of its financials.

On the other hand, a portfolio manager of Kotak Mahindra said that considering its low P/E multiple, particularly compared to other private banks, the valuation for the Bank of Rajasthan stock looked attractive. Mr Ketan Thacker of Anagram Stockbroking said today's activity in the counter may be linked to the mid-cap cherry picking by a set of market players.

"At today's closing price, the stock traded at 3.6 times its trailing four-quarter earnings per share of Rs 10.5. The bank posted a 66.9 per cent rise in net during the Q3 of 2003-04 compared to the Q3 of 2002-03. Expectations were that the bank will perform better in the coming quarters," he added.

Sahara India Financial Corp held 4 per cent and Goldman Sachs Investment (Mauritius) 1.41 per cent in the bank as on December 31, 2003.

The promoters (Tayals) held 43.73 per cent and public 34.81 per cent. Incidentally, the bank held 16 per cent stake in Bharat Overseas Bank, a South-based bank.

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