Bank of Maharashtra: Recommendation Review
3/7/2013 9:00 PM Thursday
We had recommended Bank of Maharashtra (BOM) to investors in DSIJ Vol. 28, Issue No. 4 (dated February 10, 2013), when it was trading at Rs 59.35 per share. We had recommended the scrip based on the fact that the bank’s asset quality was good. Its business too has been growing at a good pace, and it has been consistently paying dividends.
After our recommendation, the scrip actually moved southwards. It is trading at Rs 53.60 at present, down almost 10 per cent. However, we believe that this is because of the volatile market environment and continue to keep our faith in the good prospects of the bank.
For the December quarter of 2012, the Net Interest Income (NII) of the bank grew by 23 per cent to Rs 792 crore while the net profit grew at a robust rate of 43 per cent to Rs 194 crore on a YoY basis. At a time when most of the banks, especially those in the public sector, are facing serious issues with regard to asset quality, BOM witnessed an improvement on that front. Its Gross NPAs decreased by 29 points to 1.71 per cent and the Net NPAs declined by 22 basis points to 0.66 per cent on a sequential basis. As of December 2012, the advances of the bank saw a growth of 48 per cent to Rs 75078 crore and the deposits grew by 42 per cent to Rs 99276 crore.
Overall, we continue to believe that the bank has healthy financials and would continue to perform well going ahead too. Hence, we recommend that investors hold on to the counter.
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