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Suresh Krishnamurthy

INVESTORS can buy the stock of UTI Bank. On key parameters, UTI Bank's performance in first half of 2003-04 does not compare favourably with those of HDFC Bank, which is the leading private sector banking player. In terms of growth in retail advances, UTI Bank's numbers has been at a relatively slower pace. The contribution of treasury gains to profit growth is also relatively high. In addition, the cost to income ratio adjusted for treasury gains is also high. UTI Bank is more dependent on a pick-up in credit growth to sustain profit growth. However, UTI Bank has shown its ability to grow its retail business in recent years. It is nimble enough to continue gaining market share from public sector banks. As such, UTI Bank appears attractive at single-digit PE multiple compared with double-digit PE enjoyed by other private sector banks. Besides, the pending sale of stake held by Unit Trust of India could catalyse investor interest in the stock.

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