PNB shares fell sharply due to a spike in its gross NPAs during the June quarter, raising concerns about its asset quality. According to a brokerage, half of the Bank's NPAs are from gems and jewellery sector
Punjab National Bank (PNB) shares hit its four-year low to Rs584.4 on Friday due an increase in its non-performing assets (NPAs) during the June quarter. On 12 June 2009, PNB shares closed at Rs594.95 while it hit its all-time high to Rs1,384.35 on 9 November 2010 on the BSE. Although the lender reported 2.3% growth in its June quarter net profit, its deteriorated asset quality, especially exposure to gems and jewellery has emerged a cause of concern for the state-run Bank.
During the quarter to end-June, PNB said its gross NPA, as a percentage of advances grew to 4.84% from 3.34% same period last year. During the March quarter, its gross NPA was at 4.27%.
"On the asset quality front, the bank found no respite on asset quality pressures, as slippages during the quarter came in at Rs3,594 crore, almost half of it contributed by a single exposure to gems and jewellery sector. Consequently, the bank's gross NPA levels jumped up sequentially by 12%," said a brokerage in a note.
During the first quarter, PNB said its net profit increased 2.3% to Rs1,275 crore from Rs1,246 while net interest income (NII) grew to Rs3,908 crore from Rs3,693 crore, same period last year. The lender reported total revenues, including NII, of Rs11,746.6 crore, a marginal increase from Rs11,721.97 crore same quarter a year ago.
PNB closed Friday 5.2% down at Rs595 on the BSE, while the 30-share Sensex ended marginally down at 19,748.
The financial arm of the M&M group of companies reported strong results, aided by higher disbursement, despite economic headwinds and a slowdown in the automotive industry
Mahindra & Mahindra Financial Services Ltd (MMFSL) reported a 19% higher net profit at Rs191 crore during the June quarter compared with Rs161 crore in the same period last year, driven by control of transaction cost and maintenance of efficiency levels and higher disbursement.
During the first quarter, the Mahindra & Mahindra (M&M) group company’s total income increased by 31% to Rs1,099 crore from Rs839 crore in the corresponding period last year. Additional general provision on standard assets amounting to Rs2.64 crore was set aside during the quarter ended 30 June 2013.
MMFSL registered a disbursement growth of 32% in the June quarter thus maintaining its leadership position as loan provider for vehicles and tractors in the rural and semi urban markets.
It maintained healthy growth of business and profits despite slowdown in auto industry growth and continuing high cost of borrowings through control of transaction costs and maintaining high collection efficiency levels. MMFSL continued to broad base its consortium of lenders by bringing in new banks, mutual funds, insurance companies and trusts.
MMFSL currently has a network of 675 offices and total assets under management of Rs29,539 crore as on 30th June 2013 as against Rs21,744 crore as on 30th June 2012, a growth of 36%.
We had written about the company in our Street Beat section of the Moneylife magazine (30 May 2013 issue) and recommended the stock at a price of Rs218.
At 2.50pm on Friday, MMFSL was trading 4.5% down at Rs230.40 on the BSE, while the benchmark Sensex was marginally down at 19,769.
The footwear company is aggressively expanding its retail footprint and has reported good numbers for the quarter ended 30 June 2013
Bata India Ltd, India’s leading footwear retailer and manufacturer, saw its June quarter net profit grow 17.6% to Rs61.94 crore driven by robust sales through strong retail expansion and product portfolio.
During the quarter to end-June, the footwear manufacture’s total revenues, including sales, grew 13.7% to Rs272 crore over the same period last year. The company reported an operating profit was Rs96.05 crore.
Rajeev Gopalakrishnan, group managing director, of Bata India said “We expect to benefit from our aggressive retail expansion, newer designs and newer product ranges in the future. We are confident our momentum will accelerate in line with our expectations as we move through the year.”
According to Moneylife data, the company's three-quarter average growth in net sales comes to 14% while the growth in operating profit is 11%. Net sales for the quarter ended 30 June 2013 grew 13.7% while its operating profit, excluding depreciation and other income, was impressive and grew at 16%. The company's market capitalisation is 15.53 times its operating profit and return on net worth is 27%.
Nomura Equity Research has reiterated a ‘Buy’ with a target price of Rs990 on Bata India. In a research report, Nomura said, “Given the performance at the half year, we are confident that the company will deliver on our expected numbers in CY13. The company’s strategy of driving growth through retail expansion and a strong product portfolio is delivering results. We maintain our ‘Buy’ rating on the stock.”
Bata India will be opening approximately 100 new format stores this year that will be more than an average of 3,000 square feet. The new stores will feature the new format, which provides shoppers with an inviting and inspiring shopping environment. This quarter, Bata has opened 15 new stores in prime shopping locations in all major metros, including Mumbai, Delhi, Bangalore, Chennai, Hyderabad and Bangalore.
The stock is one of the picks for the stockletter (http://moneylife.in/stockletters.html?46). It was recommended at Rs895. Currently, the stock is quoting at Rs909, up over 3%, on the Bombay Stock Exchange at the time of writing this piece, while the BSE Sensex is marginally up at 19,825.