Highlights • BoM is a small PSU Bank, mainly concentrated in Western India. It has deeply penetrated underbanked areas of among the most industrialized states of the country like Maharashtra, Gujarat, Karnataka etc.
• It is an excellent take over candidate as M&A begins in PSU Banks (already started within SBI group).
• Bank has controlled its NPA very well. Its NPA levels are at 0.82%.
• At CMP Rs.22, Bank is trading at about 47% of its Book Value of Rs.41,.
• At CMP Rs.21, it offers dividend yield of 9.5%. Dividend in FY 08 was Rs 2/share. It has been paying dividend consistently.
• Government shareholding is very high at 76%, which makes further fund raising easy. Also, BoM is attractive to potential acquirer in M&A, specially banks with Govt. holding near 51%.
• PSU Banks have huge exposure to G-Sec. The prices of these Govt. securities have sharply risen in past few months and yields have fallen. With softer interest economy, Bonds yield can fall more. Thus dividend yield of the safe PSU Banks stocks are much higher than the Bond Yields (10-Year 6.05% G-Sec yield is about 7.1% presently)
• The bank enjoys high CASA of about 38%.
To see full report: BANK OF MAHARASHTRA
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