Thursday, August 21, 2008

ICICI Bank NPAs rising alarmingly

The gross/net NPA for ICICI bank are rising alarmingly.

ICICI BankAxis BankHDFC Bank
Sep 20072970.94280.68243.74
Dec 20073227.82234.26279.78
Mar 20083490.55248.29298.52
Jun 20084033.57325.66496.07

Till March, increase was 250 Crore every quarter, in the last quarter it was 550 Crore. The interest rates have actually started pinching only after June, when CRR and Repo rate were increased resulting in interest rates rising by 0.75% on Housing and Car Loans. May be we will see an increase of over 1000 Crore in Sep 2008 quarter. The figures for Axis Bank and HDFC Bank looks much better. The total non performing assets of HDFC Bank is being added every quarter in the balance sheet of ICICI Bank, this too after a big selling of NPAs to ARCIL (around 9000 Crore till 2006).
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Many midcaps at prices of December 2003

I was recently looking at charts of some of the midcap companies and found that many of them were trading at a price level available in 2003 December when Sensex was at 6000. Here is the list:

Automotive Axles was at 300 today at 280
FDC was at 50 (100 before 1:1 bonus) today at 35
ZF Steering Gear was at 140 (280 before 1:1 bonus) today at 155

During these five years, the earnings of these companies have increased significantly (3x for Automotive Axles, 2x for FDC and 4x for ZF Steering Gear). Sensex EPS has also grown by around 3x and Sensex is at 14500 i.e. 2.42x. This shows what happens to small companies when investors lose interest from them. All these are debt free companies with significant dividend yield of more than 3%.
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Monday, August 11, 2008

The secret of Sun Pharma

If you analyze the profit loss account of Sun Pharma, you will find that the company hardly pays 3-4% of its PBT(profit before tax) as Tax, while CIPLA, Cadila pays almost 20% of their PBTs as tax. The reason behind this low payout of income tax lies in one of its subsidiary partnership firm established in tax heaven of "British Virgin Island(BVI)". The rule of this island is that if a company makes 90% of its profit outside BVI, it only has to pay 1% income tax. Sun pharma does all its profitable business through this subsidiary, earns 1500 Cr worth of profits and pays meagre 2% as tax. I don't know if this should be considered good for shareholders or bad.
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Wednesday, August 6, 2008

Sensex EPS Growth 0%?

When I posted on July 10, Sensex earnings was 807.78. Yesterday on 5th August at 14961.07, Sensex P/E is at 18.54 . Thus EPS turns out to be 806.96 less than what it was on July 10, i.e. June quarter results have lowered Sensex EPS instead of increasing it. The reason may be due to lower reported earnings by ICICI Bank, State Bank of India, ITC, ACC, Jaiprakash Associates, Mahindra & Mahindra, Maruti Suzuki, NTPC, Ranbaxy and Tata Motors. The pain has increased due to significant equity dilution by HDFC, HDFC Bank, Hindalco, ICICI Bank, Jaiprakash Associates, Reliance Infrastructure, State Bank of India and Tata Steel. As of 5 August 2008, these companies account for around 40% weightage in Sensex. The methodology of BSE site may be wrong.
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