| . | The week ending with
the last financial year was marked by the announcement of
the new Import policy, which removed quantitative
restrictions on a large number of consumer goods.
Although all these items would still have to face a 44%
duty barrier, many of the domestic companies would face a
stiff competition. Investors have to keep a watch on
consumer goods companies where the impact of these
measures may be heavy. In the mean time, the downslide of
IT stocks continued in tune with the NASDAQ trends. In
comparison the cyclical stocks firmed up as the Sensex
settled around 5001, a fall of around 3 % from the last
week figure of 5141. Next fortnight, some of the IT
majors may announce their provisional performance figures
for the period ending March 31st and hopefully
they would be good enough to turn the market around once
again. Amongst the traditional sectors that showed some investor fancy during the last week was the Banking sector. Action was however limited to the New generation Banks of which Global Trust Bank hit the circuit breaker on the last trading day at around Rs 79 per share. Positive sentiments on the share were triggered with the private placement of 148 lakh shares at Rs 85 per share. Simultaneously, 26 lakh shares were also subscribed by IFC Washington at the same price although they had the option of subscribing at a preferential price of Rs 60 per share. The shareholders had recently approved private placement of 260 lakh shares and the balance 112 lakh shares are remaining to be issued. With this private placement, the Networth of the Bank has moved up from Rs 363.55 crores to Rs 511.1 crore crossing the minimum requirement of Rs 500 crores prescribed for Insurance entry. It is speculated that the balance shares to be issued which constitutes around 9 % of the enhanced equity capital of Rs 121.36 crores may be issued to the strategic partner for the Insurance business. When the results for the Year 1999-2000 is announced the Bank is likely to meet the other criteria in Capital Adequacy Ratio and NPA levels that determine its eligibility to enter the Insurance sector. The Bank’s performance during the quarter ending December 1999 indicated that the net profits had moved up by over 46 % for the nine month period from Rs 50.05 crores last year to Rs 73.29 crores. The operating profits on the other hand showed a jump of nearly 100 % from Rs 62 crores to Rs 122 crores. This indicated that the slight dip observed in the profitability curve of the Bank in the year 1999 has been recouped fully. Net Profit growth of Global Trust Bank
Apart from the imminent foray into Insurance, the Bank has been taking several steps in the recent days to meet the requirements of the technology era. It has now launched Internet banking and opened additional ATM centers at many places. It proposes to raise its ATM population from 23 to 100 by the end of the year to supplement its 66 branch network. It has also introduced new treasury management services for its corporate clients. In another significant move, the Bank has launched debit cards, which have a very high untapped potential in the Indian markets. It also plans to set up an Asset Management Company to get into Mutual Fund Business. These developments indicate a bright future for the bank lead by Mr. Ramesh Gelli known to be a man of vision. In terms of stock valuation, the shares of the bank are still being discounted only at around 14 times. This is on par with Centurion Bank and UTI Bank and not on par with ICICI Bank and HDFC Bank which are discounted at around 65 to 75 times their EPS. Based on the initiatives the Bank has now taken, it is due for a re-rating in the stock markets and investors should expect a good appreciation from this share in the coming days. Na.Vijayashankar April 1, 2000
|
. |