Jammu & Kashmir bank - As good as the Place
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Emerging companies - Mid caps that can become large cap
Forum Discription: These are companies operating in growing markets having have certain niches or specific attributes like new sector plays. These are emerging multibaggers with high risks and high rewards.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1235
Printed Date: 27/Apr/2024 at 12:23pm
Topic: Jammu & Kashmir bank - As good as the Place
Posted By: vishal.sahay
Subject: Jammu & Kashmir bank - As good as the Place
Date Posted: 23/Sep/2007 at 4:30pm
|
Any idea on Jammu & Kashmir bank? ------------- Vishal |
Replies:
Posted By: basant
Date Posted: 23/Sep/2007 at 4:38pm
|
Good, well managed bank. One of the advantages is that the Govt of JK banks with JK Bank whereas it is the SBI in other states so this bank has a truckload of low cost deposits.But this is not a take over story because no one wants to head a bank with branches in Baramulla, Anantnag and Kupwara!!! ------------- '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: vishal.sahay
Date Posted: 23/Sep/2007 at 4:47pm
|
But I came to know soon it is going to start is stock broking business and also going to start some branches in London, Dubai and Canada. Wont you think that will provide some value as cushion to having branches at baramulla. And also I was just glancing thourh its financial it does not seem to very expensive stock trading at 10 times current year earning and P/BV of 1.2 FY08 which is relatuvely quite cheap as compared to other PSU. ------------- Vishal |
Posted By: basant
Date Posted: 23/Sep/2007 at 4:53pm
|
the Kashmiri pundit community is one of the smartest and educated group of people in India. Many of them are NRI's and would like to bank with JK bank as it facilitates money transfer quite easily.
Why I mentioned Kupwara etc was that if CitiBank is interested in a bank takeover it would not like to get into those places.
Fundamental setup of this bank is excellent. ------------- '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: vishal.sahay
Date Posted: 23/Sep/2007 at 6:42pm
|
Got ur point sir. ------------- Vishal |
Posted By: vishal.sahay
Date Posted: 23/Sep/2007 at 6:54pm
|
Jammu & Kashmir Bank (JKB) is one of the fastest growing banks in India with a network of 517 branches spread across the country. It is unique in terms of its structure vis-à-vis other banks. It is banker to the Jammu and Kashmir (J&K) government and has a virtual monopoly in J&K. It is functionally distinct by virtue of being a government owned private sector bank.
Source: Kotak Research Report
------------- Vishal |
Posted By: basant
Date Posted: 23/Sep/2007 at 7:17pm
|
Thanks for that. We will move this to the emerging companies section. Since I was in J&K for about 5 years in connection with our family business (which later went bust because of political/security concerns) I know the psyche up that goes with JK Bank there.
1) The average Joe on the street does not care/like about SBI/PNB etc. He thinks that JK Bank is God for him.
2) Kashmir with its fruit/horticulture and tourism industry is one of the most profitable banking areas. Havinga branch in Srinagar is as good as having one in kolkata. YOu get truckloads of current accounts and fixed deposits.
3) The Govt. of India will only speed up spending in JK so all that money is banked through JK Bank.
4) Lending because of high quality business - fruit orchards, horticulture etc is profitable.
5) the average Govt. servant banks through JK bank because money is transferred on the same day. It is quite unlike other places where people bank with HDFC bank and ICICI. These names are foreign there.
JK bank in that state is a place where the average person feels safe and secure. ------------- '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: vishal.sahay
Date Posted: 23/Sep/2007 at 7:55pm
|
Wow...sir you have pointed all the good points that a investor should look into company business model while investing.. ------------- Vishal |
Posted By: basant
Date Posted: 23/Sep/2007 at 8:01pm
|
They have partnered the JK Govt. to distribute 21 lac ration cards and also to make microfinance advances. I read in a magazine probably Outlook that this would help them create a database of propspective customers while creating a platform for advertisement.
------------- '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: 23/Sep/2007 at 8:06pm
|
Let me get into Stock Editor's shoes............
"Basant jee, since we are discussing J&K here let me take my gun out & ask you that cliched question: 'If I put a gun to your head would you say YES to J&K Bank or say YES only to YES Bank?'"
P.S.: Gun is loaded for a change!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: basant
Date Posted: 23/Sep/2007 at 8:20pm
The chairman of the BCCI always bets on his cricket XI and I am no different - especially with the gun.
------------- '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: vishal.sahay
Date Posted: 23/Sep/2007 at 8:22pm
|
I think uptrend in J&K’s economy is likely to be a key trigger for J&K Bank. Since J&K Bank is a banker to the state government and also boasts a wide state network; it would be the biggest beneficiary of any new projects upcoming in the state. Also, tourist flows have begun to improve and a couple of power projects have taken off in the state. Further, the positive news flow regarding the Indo-Pak peace process will also provide greater business opportunities and lead to better perception of the bank, leading to higher valuations. ------------- Vishal |
Posted By: vishal.sahay
Date Posted: 23/Sep/2007 at 8:29pm
|
But sir if you was to choose some extras then what could have been your options as team India always goes with 15 member team. So what be your other two bets? ------------- Vishal |
Posted By: basant
Date Posted: 23/Sep/2007 at 8:47pm
|
Tough call right now but Ktk bank is OK though on valuations there could be a waiting period till earnings catch up,CBOP (a takeover play where investment time line is indefinete). Of late I am becoming attracted to the private banking space and the thrust is on the non regional players because they come with the unknown power of takeover post 2009. I heard that RCAP is eyeing Karnataka Bank - completely unsubstantiated and from the grapewine. I would not buy Karnataka Bank though.
------------- '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: vishal.sahay
Date Posted: 23/Sep/2007 at 8:58pm
|
thanks for sharing your views sir.. ------------- Vishal |
Posted By: tyler_durden
Date Posted: 23/Sep/2007 at 10:18pm
|
basant ji wat about the sarkari mindset of employees of PSU banks?? till now i used to think SBI is a great bank...thats because my father is at a very high position and whenever i had some work it was done by just a phone call frm dad....but yesterday i went to the bank on my own and i think SBI is the worst bank....office office serial yaad a gaya.... ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: kulman
Date Posted: 23/Sep/2007 at 10:25pm
|
....office office serial yaad a gaya....
---------------------------------------------------------
That's one of my most favourites...Mussaddilal, Pandey jee, Shukla, Bhatia, Usha jee, Patel all of them..... Excellent creativity. Great acting by Pankaj Kapoor & company!  ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: smartcat
Date Posted: 23/Sep/2007 at 11:58pm
|
um... CBoP? J&K bank? Yes Bank?
Basant, you seem to be suddenly fascinated by banks. Do you see any structural changes happening in this sector? Do you, for some reason, feel that BSE Bankex will outperform all other indices in the future?
Compared to media & retail, these seem to be quite 'boring' in comparison. Yeah, I know GDP is growing, economy is growing, people will save and put the money in the bank, blah blah yada yada. But isn't this something we all knew 4 years back?
I wonder what a typical TAU on CNBC would do if you give them the 'gun treatment'. |
Posted By: jstk
Date Posted: 23/Sep/2007 at 11:05am
|
J&K bank also has approx 25% in Metlife insurance. ------------- If you buy for a non-value reason, you will end up selling for a non-value reason. |
Posted By: basant
Date Posted: 23/Sep/2007 at 11:25am
|
Now if that is only a financial investment then it is OK but in case the banmk was to cross sell Metlife through its branches then it would not be that successful.JK bank has a very far reaching rural penetration I am not sure if Metlife and Bajaj Alliance will do well in rural areas as such. That is because people who are under informed understand only LIC when it comes to insurance.
------------- '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: Mr. V
Date Posted: 24/Sep/2007 at 11:40pm
|
I used to own J&K bank. Very solid management. Apart from J&K, they have presence in about 20 other states. They are quite strong in NCR(22 branches), Punjab, UP and Mumbai (9 branches). |
Posted By: Mohan
Date Posted: 24/Sep/2007 at 6:05am
Is this a portfolio investment or are they Co-promoters of Metlife in India ? How much of this value is reflected in its stock price ? ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: jstk
Date Posted: 27/Sep/2007 at 4:49pm
|
its a JV between Metlife, Pallonji group & J&K bank. The bank is not directly involved in the day to day mgmt . (It's a corporate agent for the products)
about the holding reflecting in the m/cap, i guess any analysis would be incorrect without metlife india current numbers and an insight into their India strategy/ future plans ( i have neither ) ------------- If you buy for a non-value reason, you will end up selling for a non-value reason. |
Posted By: vishal.sahay
Date Posted: 28/Sep/2007 at 12:37pm
|
I think someone from TED is definately buying this stock as since the inception of this thread the stock has rose by more than 12%. Thanks Basantji for providing a platform to very investor for sharing their investment ideas and gaining knowledge it has been very great of you. I hope this continues for long time. ------------- Vishal |
Posted By: us121
Date Posted: 28/Sep/2007 at 1:17am
Sir, Even i like it the most.
This is the only serial where i can seat uninterrupted for that 30/40 miunutes.
recently i saw one more episode of 'new office office' on jet inflight etnertainment.
Patel is replaced. Musaddi has got son 'chhota musaddi'
thoroughly enjoyed. ------------- ABILITY will get u at d top. CHARACTER will retain u at d top |
Posted By: basant
Date Posted: 25/Feb/2009 at 2:38pm
|
Does anyone have any latest report on J&K bank?
------------- '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: tverma
Date Posted: 01/Mar/2009 at 1:29am
|
Jammu and Kashmir bank rises 10.54% http://www.myiris.com/newsCentre/newsPopup.php?fileR=20090203140039193&dir=2009/02/03&secID=livenews PS: Axis bank on the other hand reported about 63% rise in net profit and think PNB n SBI also reported close to 40% increase in profit. |
Posted By: basant
Date Posted: 01/Mar/2009 at 5:52am
|
This is available at apE of 3times FY09; Dividend yield of 7% current year and a Price to book of 0.4 times.
------------- '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: Market Maniac
Date Posted: 17/Jun/2010 at 3:43am
|
J&K is an amazin Buy. Since FY05, its Advance have grown 10x & PAT has gone from 90Cr. to 500Cr.
CASA - 41%
PCR - 82%
Net NPA - 0.28%
CAR - 15.89%
NIM - 3%
RoA - 1.20%
PE - 7.4x
P/BV - 1.25x
EPS CAGR (5 years) - 31%
Its a Universal Bank in J&K and a corporate bank in RoI.
|
Posted By: basant
Date Posted: 17/Jun/2010 at 9:34am
|
I agree. ------------- '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: vijayM
Date Posted: 18/Jun/2010 at 7:49pm
How do you compare yes bank & J&K bank. yes bank ceo is claiming a 35% CAGR for next 5 years, while JK bank has a proven 30% growth ------------- If a business does well, the stock eventually follows:Warren Buffett |
Posted By: nav_1996
Date Posted: 18/Jun/2010 at 7:52pm
| They also have a good stake in Metlife. |
Posted By: Market Maniac
Date Posted: 19/Jun/2010 at 1:46am
|
26% stake in Metlife.
Chairman has declared that they would bouble the PAT to 1000Cr by 2012.
Volumes of 7000 shares for a banking counter shows disinterest amongst investors.
Although the J&K government holds 53% stake in it, it operates like a Private sector bank.
Can anyone explain the reason?
|
Posted By: subu76
Date Posted: 20/Jun/2010 at 3:46am
|
Along with Market Maniac's question please add my query too:
Why is the company's Return on Asset so low (1.09)...shouldn't it be more like 1.5 if it enjoys such a strong position in the state?
Not sure if any explanation is possible but checking for guesses if any.
|
Posted By: Market Maniac
Date Posted: 21/Jun/2010 at 12:12pm
|
RoA>1% is considered healthy in the bankin industry.
for FY10, J&K Bank has got a RoA of 1.20% and not 1.09%.
This is amongst the best RoA across the sector.
|
Posted By: subu76
Date Posted: 21/Jun/2010 at 12:37pm
| Thanks for the correction...I has just seen the 09 Annual report.....waiting for the 10 report. |
Posted By: Market Maniac
Date Posted: 22/Jun/2010 at 1:57am
|
Geography wise Composition of Advances :
FY02 : J&K - 12%
FY05 : J&K - 34%
FY09 : J&K - 50%
So while the other regional banks are diversifying in other states, J&K Bank is strengthning its hegemony in its native state.
This stratergy makes a lot of sense to me.
|
Posted By: subu76
Date Posted: 01/Jul/2010 at 9:23pm
It surely lacks the appeal that some small private banks with ambitious plans and charismatic leaders have. Also, when it comes to banks it is relatively small in size.
The stock has continued to trade in the same ranges as the last few years...It's earnings growth has not been lacklustre though.
|
Posted By: Circuit
Date Posted: 01/Jul/2010 at 10:08pm
Dr. Haseeb Drabu (husband of Barkha Dutt) may not have a charm of Uday Kotak or Rana Kapoor but is surely a very respected leader in Banking Industry.
------------- Fundamentalists and anticipators may have difficulties with risk control because a trade keeps looking ‘better’ the more it goes against them....Ed Seykota |
Posted By: srisaurabh2000
Date Posted: 01/Jul/2010 at 11:05pm
More than that the political situation in J&K and hence the name J&K tied would be a concern for investors'. That would probably discourage investors.
|
Posted By: vinvestor2010
Date Posted: 01/Jul/2010 at 1:09am
|
Hi just 2 points about J&K Bank that might be useful
1]The bank is very dependent on government spend plans
- the government owns half the bank, and lends itself 15-2O% of the money. Like all PSU banks that creates a circularity that should be accounted in calculations.
2]In the CASA ratio a very large share is of J&K government employees as private sector is nascent there due to political situation.
-not sure if 6th pay commission is implemented there but it would impact it
significantly.
So to look for a trigger to this stock look at Central and J&K Govt spend plans for the state
-The current strategy needs to be checked
- A slide on the Motilal Oswal presentation states they want to expand advances in J&K, to put it simply recovering personal loans might be a problem
 only if political situation is stable then investment there in tourism and fruit farming makes a lot of business sense. In both Kashmir is a world leader.
On the funny side due to Article 37O their real estate exposure is close to nil I guess
|
Posted By: subu76
Date Posted: 01/Jul/2010 at 10:10am
|
Hey vinvestor2010, could you please describe more on the circular money funda. Is this an issue as long as a bank maintains a decent NIM?
On the Motilal Oswal point ..... the NPA levels of this bank seems to be quite good.
BTW....nio triggers seems to be apparent for this bank....but it seems to be doing pretty well on the earnings front and various bank parameters NIM, NPA, RoA seems to be improving every year.... The mai baap status and lack of competition that folks highlighted in the thread seems to be at work. (personally that's the fact which i find extremely attractive)
|
Posted By: vinvestor2010
Date Posted: 02/Jul/2010 at 1:25pm
|
Subuji what I mean by circularity is it is sort of related party transaction.
The government is owning the bank, giving the deposit and taking the loan.
So it's earning is [Dividend + Deposit Earning - Loan Payment]
Net net it is taking from left pocket and putting in right pocket, we need to check if value is being created.
So the deposit and loan book should examined Y on Y to check if they are diversifying from govt or it is still the same.
I do not have numbers but if say 3 years ago Govt share of loans was 3O% and now it is 25%, that would be a good sign.
Also this is applicable for all PSU banks not just J&K bank. Private banks are safer because they have a 5% ownership ceiling. However that also means in troubled times they do not have a strong promoter
 But the numbers are quite compelling and even I am thinking if I should buy the low NPA and valuation are quite good
|
Posted By: subu76
Date Posted: 02/Jul/2010 at 6:42pm
| Thank you for explaining. |
Posted By: subu76
Date Posted: 03/Jul/2010 at 5:40am
BTW RoA is now 1.3%....that's a pretty sweet spot to be in.
Over the last 6 years the Cost of funds has never gone above 6%.
|
Posted By: subu76
Date Posted: 03/Jul/2010 at 5:44am
I will check more:
My understanding is that they're mainly exposed to handicrafts/horticulture/personal loans and home loans. (besides corporate exposure)
The personal loans is mostly made to government employees whose salary accounts are with them so it might be ok.
|
Posted By: subu76
Date Posted: 04/Jul/2010 at 5:41pm
Do you know how they plan to do this?
With a RoE around 19-20% this seems like a pretty uphill task.
Though i'll admit they have significant scope to leverage
|
Posted By: nikhil090
Date Posted: 04/Jul/2010 at 7:25pm
| How will this compare with kvb? |
Posted By: subu76
Date Posted: 04/Jul/2010 at 10:33pm
Advances to Government has gone down from roughly 30% to about 16% over the last 5 years.
Overall, the advances this year looks pretty balanced...except for corporate advances which is high since that constitues most of the loan book outside the state
|
Posted By: subu76
Date Posted: 04/Jul/2010 at 10:42pm
|
BTW one unique feature about this company is that they don't seem to be smoothening out their numbers ......
Perhaps that is because it's a govt owned firm.
|
Posted By: subu76
Date Posted: 04/Jul/2010 at 2:46am
| Must be a typo...in one of their Presentations I noticed that the state governement is investing $240 billion in power over the next 4 years....clearly seems impossible |
Posted By: subu76
Date Posted: 06/Jul/2010 at 7:41pm
|
This one seems to be an extremely unpopular stock.
Assuming someone bought this stock 5 years back and he checked the price today....he'd see that the price has not budged at all despite the company earning a lot more both in terms of quantity and quality, management being extremely adept and focused on the long term and the strength of the company only increasing every year. Looking at the CASA, NIM, Cost/revenue, NPA etc it seems to be a real delight.
The PE and P/BV of the company has been on a continuous slide down.
The versions the management came out with on various occassaions are 1. The kashmir name and 2. the ownership pattern.
It's true.....The Kashmir name is a big turn off...the state has been in some sort of boil ever since independence.
|
Posted By: hit2710
Date Posted: 06/Jul/2010 at 8:28pm
I think a lot has to do with the name Jammu and Kashmir as you mentioned in the post. Have u compared it to other PSU banks in terms of P/BV or P/e or whatever other parameters are applicable to banks? Just curious. regards ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: prabhakarkudva
Date Posted: 06/Jul/2010 at 8:44pm
Subuji, Why do you think things will change now in terms of valuation?Any triggers you foresee? ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: nikhil090
Date Posted: 06/Jul/2010 at 8:57pm
|
Since you have already made your decision, please do not think otherwise, but have a look at KVB or Andhra Bank/Indian Bank.
KVB is available at roughly similar valuation but it is a private bank. Their ROE/ROA are probably better.
In PSB, Andhra bank or Indian bank are cheaper and may not have any "put-offs"
|
Posted By: subu76
Date Posted: 06/Jul/2010 at 1:08am
|
I need to prepare more for the comparitive studies. So far i've internalized a lot of stuff on J&K. I'll get back.
Hey Nikhil, Thank you for posting on KVB. I've been extremely busy with reading up all the material about J&K. I'll get back after reading more on KVB and then discuss more with you.
Hitesh, I'm unable to find a place to have the consolidated numbers. I carried out comparisons with HDFC, SBI, Axis, Yes, ICICI etc which i saw in one of the Outlook Money articles. Could you please suggest a source?
Prabhakar, nahin yaar...no visible triggers......but here is what i thought....that after 10 years J&K should have 4 times the current earnings... It's hard to see it's dominance being easily dented....Also after 10 years the value of it's Metlife stake will be about 2000 cr (roughly half it's current market cap) Metlife is contractually committed to buy back it's stake at 15% CAGR. So this seems like an easy 4x stock for me if i hold it for about 10 years.......given that at a 7-8 PE it's hard to see it going down significantly....
|
Posted By: bharti
Date Posted: 06/Jul/2010 at 1:35am
|
How about Max India instead of J&K Bank? |
Posted By: subu76
Date Posted: 06/Jul/2010 at 1:38am
|
A pretty good comparison of J&K bank vis a vis other banks
http://www.jkbank.net/pdfs/PresentationsForAnalysts/CLSAIndia%20ForumNov0409Gurgaon.pdf - Link
|
Posted By: subu76
Date Posted: 06/Jul/2010 at 1:41am
I guess Max India is a pretty new entity. J&K bank has been around for decades and has a track record of profitability/dividend payment for 4 decades. It's only now that they have got their act together in terms of inproving intrinsic value
|
Posted By: subu76
Date Posted: 06/Jul/2010 at 1:58am
|
Ignoring multiple accounts about 40% of J&K's adult population has an account with J&K bank.
The state of J&K experience eco growth of 6.87 during 09/10. The per capita income rose by 8.54 and is expected to rise by 9.92 next year. This increase is driven by fruits, handicrafts and renewed tourism. (source planning comm. documents)
J&K remains one of the least banked regions in the country
|
Posted By: prabhakarkudva
Date Posted: 06/Jul/2010 at 8:59am
|
Subuji,
4-5 times in 10 years an ok result? What about the opportunity costs? Dont you think today there are easy 10 times in 10 years kind of stocks available.If not any single stock but atleast those kind of returns are possible in India today. Just curious what your return expectations are over say the next 10 years in the stock market? ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: basant
Date Posted: 06/Jul/2010 at 9:08am
Unless you are diversifying to curtail risk from events/stocks that you do not know well it is always better to look at opportunity cost before investing. To me, opportunity cost is the most significant aspect of investing which is least discussed. ------------- '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: bihisello
Date Posted: 06/Jul/2010 at 9:24am
Roughly what would be CAGR of 10x10 returns? |
Posted By: basant
Date Posted: 06/Jul/2010 at 9:34am
|
26% CAGR check this out: http://www.theequitydesk.com/forum/forum_posts.asp?TID=922&KW=magic ------------- '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: bihisello
Date Posted: 06/Jul/2010 at 10:03am
Thank you very much! Very useful link. |
Posted By: subu76
Date Posted: 07/Jul/2010 at 2:26am
Personally, I'm getting to a mode of not thinking too much about how much returns the stock price can give while buying.
I'd be happy to select a non cyclical (nothing is trully so) stock growing at 15-25% at sub 10 PE and hold them for a long time.
The growth should look very likely based on monopoly, low capital required etc.
I'm thinking if buy 1-2 such companies in a major way from my saving every year I'll do ok.
This is the summary of the stock buying behavior that i figured out by all the reading over the last 3 years.
Lemme know what you think.
BTW in case of J&K the earnings growth could be much more than 4 times over 10 years. Mgmt want to double earnings over the next 3 years . They've started rasing capital and the company has the potential to take their ROE above 20 with that. Also, it does meet each criteria of an unpopular company. Let's see if i can sell it one day for a 20+ PE. Now that is karma
 |
Posted By: vinvestor2010
Date Posted: 08/Jul/2010 at 11:22pm
|
Subuji just an additional point earlier I had mentioned that the bank is heavily dependent on Govt for loans, and deposits.
I spoke to a friend who has really good understanding of stocks esp banks and the view was that it actually makes banks much safer, because on both sides there is solidity and stability of government support it is like having government bond with even better spreads so it might actually be a plus for J&K bank, though i still think it is little riksy IMHO |
Posted By: subu76
Date Posted: 08/Jul/2010 at 11:39pm
|
Thanks for this input. I've heard on this point from Haseeb Drabu. Will post as soon as I find that one
|
Posted By: Market Maniac
Date Posted: 21/Jul/2010 at 11:58pm
| Is J&K better than South Indian??? |
Posted By: subu76
Date Posted: 25/Jul/2010 at 1:59pm
|
I have another counter question: Does South Indian bank have an edge over competitors in terms of either getting low interest fund or in terms of attracting stable loan takers? |
Posted By: sainivas
Date Posted: 26/Jul/2010 at 8:45am
|
South Indian Bank:
Deposits are around 26% and low cost foreign currency deposits are another 10% or so. So while the CASA is not very high compared to the best in the industry the unique combination of SA+Forex Deposits take it close to the best. Credit Growth: Has been steady at the upper end of the industry growth. Very low NPAs. People: Since nearly 2/3rd of the branches were in Kerala, there is a strong influence of Kerala in its people. Initially I thought it was negative, on reflection I feel that having a majority of senior people who are somewhat of a homogenous background has its own advantages (and disadvantages). I am not from Kerala but have been highly impressed by several of their managers I have met across the country. Low key, efficient, understand banking. Spread: They now want to spread across the country. Conservative: They are very conservative, simple. Leadership: Most of the public sector banks will see new Chairmen coming in over the next 24 months due to retirement. The SI Bank's Chairman Joseph is well regarded and more importantly well liked by the staff. Unlike a large bank, any employee or junior manager can walk in and talk to him. Compensation: SI Bank's managers and staff have a high component of performance based bonus in their annual compensation. This is based on a matrix of parameters: NPAs, deposits, credit etc. Total compensation is higher than other old private banks. I found this while comparing the salary costs across banks and asked around. Overall, I like the bank's approach. Keep it simple and use the 3,3,3 rule in banking. Take money at 3%, lend it at a 3% markup and be at golf course at 3PM. Suits and wannabes with laptops often means trouble in the banking business. ------------- Agey Dekho |
Posted By: tejas
Date Posted: 27/Jul/2010 at 7:34pm
|
Subu, Seems like you are collecting one bank from each end of India. J & K Bank from North and SI bank from South. How about one from West and East too ? ------------- Earnings, Earnings, Earnings. |
Posted By: s_praharaj
Date Posted: 27/Jul/2010 at 10:31pm
|
I am not in SI Bank, but I have worked with Dr Joseph.
The day he went to SI Bank, I knew the Bank will go to greater heights. He is a pure HR man with very high common sense and intelligence. He has a ability to make people give their best. He has another quality, he can identify the lone diamond from a heap of pebbles. The Bank will definitely do better under his leadership. J&K Bank is one of the strongest Bank in the private sector. The Bank is rated low because of its origin and area of operation. But it is a Bank with very strong fundamentals. I find it is grossly undervalued. ------------- Shashi Praharaj |
Posted By: tejas
Date Posted: 27/Jul/2010 at 2:05am
Shashiji, Any other bankers you think are worth following ? Thanks for sharing your opinion. ------------- Earnings, Earnings, Earnings. |
Posted By: subu76
Date Posted: 27/Jul/2010 at 10:31am
No..not there yet.
So far i've managed to read up and build full conviction on J&K only |
Posted By: subu76
Date Posted: 27/Jul/2010 at 10:33am
|
Sashi and Sainivas. Thanks for your detailed notes on SI Bank.
One point which I find really surprising is how these smaller banks which do not necessarily have a dominance over any particular region are also doing well.
Is all parameters like competitive adv etc not so important when it comes to banks because the opportunity is so huge?
|
Posted By: subu76
Date Posted: 10/Aug/2010 at 12:18pm
|
1. JKB has announced a dividend of Rs 22/share.
It was Rs 16/share last year
2. Given the violence during the weekdays....J&K bank was open this Sunday...to unblock transactions.... Kind of goes to show it's more in the private bank mode which it claims to be in
3. J&K bank provides a guidance of 23% growth this year
|
Posted By: Market Maniac
Date Posted: 29/Aug/2010 at 4:45am
| If the CEO can be summarily dismissed by a phone call from the CM, then I wonder how they claim to be a private bank. |
Posted By: LearningToFly
Date Posted: 29/Aug/2010 at 11:16am
|
In India, politicians are above any law and accountability. They can dismiss anybody.
------------- Success... at all cost. |
Posted By: subu76
Date Posted: 30/Aug/2010 at 1:19pm
Isn't it really ironical that one of the primary reasons why Drabu had to go was statement 2 above that i thought was a nice gesture by the bank.
|
Posted By: Market Maniac
Date Posted: 30/Aug/2010 at 3:17am
|
Anyways the market is overreacting.
@CMP of 785/- P/BV - 1.2x The bank has least NPA (0.03% or 8Cr.) in the whole industry. Its also the cheapest bank stock. Good time to enter |
Posted By: subu76
Date Posted: 31/Aug/2010 at 1:41pm
|
I'm also betting on the points you called out...if you lay out the data of the top banks and lay out J&K along side it looks really attractive...
Having said that:
Historically it has been a cheap stock...in 2001 it was available at 1 PE...
Ironically, violence in J&K just helps the bank consolidate it's position presumably because it introduces new barriers for new players
|
Posted By: Ravenrage
Date Posted: 31/Aug/2010 at 9:03am
| Wont there be any negatives because of the CEO being removed ? |
Posted By: commnman
Date Posted: 31/Aug/2010 at 10:28am
FII's hold about 33%. What will happen if they exit completely 
|
Posted By: somu0915
Date Posted: 31/Aug/2010 at 11:05am
|
Why to worry about FII's? Stocks eventually perform on earnings, not on FII's. |
Posted By: nikhil090
Date Posted: 01/Sep/2010 at 9:10pm
| When "visible" peace returns to the valley, prosperity will come to the shareholders.. Till then, it can be a wait. |
Posted By: subu76
Date Posted: 02/Sep/2010 at 8:09pm
Not sure on that count...
If someone invested in this stock on this day 8 years back (bse does not have prior data) the person has a ten bagger on today's price...excluding dividends.
I think this return would beat market returns easily
|
Posted By: master
Date Posted: 02/Sep/2010 at 9:50pm
8 years is a long frame. One just had a 7-bagger in Central Bank of India in 15 months flat. Won't be surprised if something spectacular comes in cbi again in next 3 years (hardly matters, since exited).
For J-bk, lot will depend on situation in state, and pure fundamentals will matter far less. Seeing mood in the valley, sometimes feel it should not end up becoming a foreign bk. Pardon my ignorance..
------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: subu76
Date Posted: 02/Sep/2010 at 10:11pm
|
Hey, I's just countering Nikhil's point to say it has given above market returns in the past 8 years.
I doubt i'll ever get a 7 bagger in 1.5 yrs. :-(
|
Posted By: master
Date Posted: 02/Sep/2010 at 10:21pm
7 may need luck as well, but kind of under-valued stocks you dig up, 2-3 times should be more like it. J-bk should also outperform hereon. Best wishes, ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: basant
Date Posted: 04/Sep/2010 at 7:34am
|
M Y Khan accuses Drabu of distorting JKB figures ------------- '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: subu76
Date Posted: 05/Sep/2010 at 1:47pm
|
More Masala here... http://www.risingkashmir.com/news/khan-trashes-drabu%E2%80%99s-success-story-1131.aspx - Link
The previous chairman also compare the stock market gains during the two different tenures,,
Sample these:
During my tenure the share price was Rs 38 in 1999 which zoomed up to Rs 400 in 2005. This is a 1000 per cent increase
The share value increased from Rs 400 in 2005 to Rs 800 in 2010 which is just a 100 per cent or 1.25 times-increase.
|
Posted By: nav_1996
Date Posted: 05/Sep/2010 at 1:59pm
| Looks like political nonsense. He says nothing wrong with books but achievements are not potrayed correctly. Isn't this being done by all other managements. |
Posted By: rapidriser
Date Posted: 05/Sep/2010 at 3:56pm
|
Looks like a typical turf war between two bureaucrats, rather than anything seriously wrong with the bank. I hope the share price keeps crashing with all that negtive publicity. it will be a nice opportunity to accumulate the shares. ------------- When all else is lost, the future still remains. - Christian Nestell Bovée |
Posted By: Market Maniac
Date Posted: 10/Sep/2010 at 1:55am
|
Dabru was supposed to retire next year.
What's the big deal if he went a year earlier. And if he actually was an incompetent liar as the former Chairman suggests then its a good thing that he was fired. Either way there is no reason why the stock should fall when the Bankex is making new highs. |
Posted By: nav_1996
Date Posted: 10/Sep/2010 at 10:43am
| It has already recovered 8%. |
Posted By: Market Maniac
Date Posted: 14/Sep/2010 at 2:00am
| Cheapest & cleanest bank of India |
Posted By: nav_1996
Date Posted: 17/Oct/2010 at 9:12pm
| Yes. This bank is cheapest across PSU and Private banks on P/BV. Its numbers are one of the best in industry though growth may be a bit moderate. |
Posted By: Market Maniac
Date Posted: 17/Oct/2010 at 12:43pm
|
Founded in 1938, and 53% owned by the state government, Jammu & Kashmir Bank is by far the largest bank in J&K with a 70% share in the Deposits & 87% share of Advances of the state. JKB has a total of 536 Branches out of which 380 are in J&K.
43% of the adult population of the state have accounts with the bank. It is also the only listed company from J&K. JKB is unique in that it is the banker to the state & central government in J&K. All Direct & Indirect Tax collection, welfare programmes and govt. projects are conducted through JKB. Also the state govt. employees as well as the central armed forces stationed in the state have their salary accounts in the bank. 14% of the banks total advances are to the government. JKB also has an Insurance JV with MetLife International with 26% stake. The bank is a Universal Bank in J&K providing the whole range of financial services from auto loans to stock broking services whereas in the rest of India it is a Specialized Corporate bank. The loan book is equally divided between J&K and RoI. The strategy of the bank has been to saturate J&K states banking landscape. This is a sharp contrast to other regional banks who want to become a pan Indian by opening branches in far fetched corners of the country and lose market share in their home state in the process. JKB on the other hand wants to open 30 more branches in J&K to further strengthen its grip in the state. 60% of its RoI loan book consists of Corporate loans. Breakup of the Loan Book : Corporate - 36% Personal - 15% Government - 14% SME - 14% Trade - 11% Agriculture - 10% Q1FY11 (annualized) : CASA ratio - 38% ( average for Indian Banks - 30% ) Cost of deposits - 5.10% Yield on Advances - 10.86% NIM - 3.7% ( average for Indian Banks - 3% ) Cost to Income - 37.26% RoA - 1.34% ( average for Indian Banks - 1% ) PCR - 99% ( highest amongst all Indian banks ) NPA ( Gross ) - 1.92% NPA ( Net ) - 0.03% ( lowest amongst all Indian banks ) Net NPA (Cr.) - Rs. 8 Cr. CAR - 16% Dividend Payout Ratio - 24% FY06 -10 CAGR : Networth - 13.67% Deposits - 12.64% - Savings Bank Deposits - 19.6% - Current Account deposits - 12.9% Advances - 12.11% Total Assets - 12.24% NII - 17% Operating revenue - 18.7% Operating Expenses - 13.7% Operating Profit - 22.2% Provisions - 15.3% PAT - 30% EPS - 30% Dividend - 28.77% CMP - 782/- Market Capitalization - 3800Cr Book Value - 650/- EPS - 111/- PE - 7x P/BV - 1.2x Dividend - 22 FY11E : EPS - 130/- Book Value - 750/- P/BV - 1x PE - 6x Valuation : JKB is trading at 1x FY11 Book Value of 750/- and 6x FY11 EPS of Rs.130/- per share. A 20% sustainable RoE at book is a true bargain. According to the annual report of FY10, the bank wants to achieve a business volume of 1,00,000Cr & PAT of 1000Cr by FY12. If we assume this to be true and give it a multiple of 10x, then the Market Cap. will be 10,000Cr. or 270% upside from CMP. Opportunity & Threats: The noise about the political situation in J&K and removal of the Chairman by the state government has taken its toll on the bank and has led it to underperform the Sensex while the BANKX has made an all time new high. This is unwarranted. If anything political instability in the state will act as an entry barrier since other banks will be reluctant to enter the state. The only possible damage that political instability might cause to the bank is increase in NPA's. Worst case Scenario : Even if Kashmir continues to burn and economic activity comes to a standstill, JKB can still lend to corporates in say Delhi & Bombay and enjoy a healthy spread. In other words irrespective of the political situation the business model will remain intact. Price is Best when the gap between perception & reality is the maximum. This applies to J&K Bank perfectly. |
Posted By: subu76
Date Posted: 17/Nov/2010 at 10:57am
Hi Sir, any idea if the bank will need to raise new funds to meet new Basel norms?
|