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Sunday, Oct 26, 2003
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Indian Overseas Bank: Under valued

FRESH investments in the stock of Indian Overseas Bank can be considered. The stock offers a dividend yield of close to 5.3 per cent and is trading just marginally above its book value. It is also trading at a price to earnings multiple of three. These make the stock attractive in terms of valuation.

The financial performance of the stock in the last couple of years has been impressive. The rate of growth in its low cost deposits and advances has been slightly above industry average. It has also been able to rein in the proportion of bad loans. It is set to close 2003-04 with an impressive growth in profits, of at least about 30 per cent. In this context, the stock offers the potential to deliver reasonable capital appreciation from present levels.

BL Research Bureau

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