Financial Daily from THE HINDU group of publications
Wednesday, Jun 30, 2004

Cross Currency

Group Sites

Markets - Stock Markets
Money & Banking - Stocks

IDBI gains on value buying ahead of universal bank status

Jayanta Mallick

Kolkata , June 29

THE IDBI stock on Tuesday drew significant attention in the market amid mixed signals in the banking counters. The stock had an 11.8-per cent rise on the NSE with a traded quantity of 25.24 lakh shares.

The valuation of IDBI is being re-looked by the market as it is rolling ahead to metamorphose into a universal bank from October 1 this year.

From the market perspective, the Rs 110 book-value stock has been fetching a very low valuation.

After the current restructuring, IDBI is expected to be free of many of its past baggages, which it acquired as a developmental financial institution (DFI). On the other hand, unlike many PSU banks, it will not be dependent on treasury income as it never quite really swam in this presently troubled waters to soar up its bottom line.

Its exposure in the Dhabol power project is seen as the biggest negative as it continues to remain sticky. However, banking sources based on the trend in negotiations among the lenders, expect a solution to the vexed problem soon enough.

"The DFIs, which are turning universal, are expected to start their journey with a clean slate and with a sleek balance sheet", Mr Gul Tekchandani, CIO of Sun F&C, commented.

In the firmer interest rate regime, DFI- turned-universal banks are likely to perform better than many of the PSU banks, he felt.

According to Mr Devarsh Vakil of Anagram Stockbroking, at today's closing of Rs 37.60, the stock traded at 7 times its FY04 earnings. The delivery figures suggested over half the traded volumes were for investments.

More Stories on : Stock Markets | Stocks | Financial Institutions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Ramakrishna Mission plays safe with Govt bonds

Kotak Mahindra MF launches fund of funds
Bull run arrested
Vimta Labs on growth prospects
IDBI gains on value buying ahead of universal bank status
Outlook positive for Tata Power, SBI
Global investors bullish on India: Merrill Lynch survey
Mid-caps maintain momentum; techs slip
Hutch plans Rs 1,500-cr IPO

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line