X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
PNB Gilts: Interest rate play - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 5, 2001

    PNB Gilts: Interest rate play

    PNB Gilts, a frontrunner in the government securities market has reported 68% jump in 4QFY01 profits. Favourable interest rate scenario has fueled the profit growth of the company.

    (Rs m) FY00 FY01 Change 4QFY00 4QFY01 Change
    Interest Income 2,339 2,222 -5.0% 662 833 25.7%
    Other Income 24 25 2.1% 2 1 -18.6%
    Interest Expenditure 1,260 1,346 6.8% 333 272 -18.4%
    Operating Profit (EBDIT) 1,079 876 -18.8% 330 561 70.2%
    Operating Profit Margin (%) 46.1% 39.4%   49.8% 67.4%  
    Other Expenditure 41 90 121.0% 11 14 26.8%
    Profit before Tax 1,062 811 -23.7% 320 548 71.2%
    Depreciation 4 4 1.3% 2 1 -43.3%
    Tax 401 336 -16.1% 121 215 77.8%
    Profit after Tax/(Loss) 658 471 -28.5% 197 332 68.4%
    Net profit margin (%) 28.1% 21.2%   29.8% 39.9%  
    No. of Shares (eoy) 100 135   100 135  
    Diluted Earnings per share* 4.9 3.5   5.8 9.8  
    P/E (at current price)   5.1     1.8  
    *(annualised)            

    PNB Gilts currently offers various products including treasury bills, central and state government securities, PSU bonds, commercial papers, bill re-discounting and call money operations. It is the only listed company operating in the debt markets with turnover of Rs 33 bn. The company has a wide client base including banks, provident funds, pension funds, charitable trusts, insurance companies, other primary dealers, corporates and individuals.

    FY01 started on a negative note for the company. Sharp increase in the international oil prices and continuous depreciation in rupee forced the RBI to increase bank rate and CRR. As a result, the company's financials took a hit in the first half of the year with increase in interest rates leading to a sharp fall in the prices of government securities, and volatility in the call money market. PNB Gilts had incurred a loss of Rs 392 m in the first half due to diminution in the value of securities.

    PNB Gilts was also affected by Madhavpura Cooperative Bank scam. It had lent an amount of Rs 100 m in the call money market to the bank, which is still overdue. The company is initiating measures to recover the amount. However, in the absence of complete information and clarity of position in this regard a provision of Rs 50 m has been made by the company.

    The second half (particularly 4QFY01) has however provided windfall gains to the company. Its operating profits soared by 70% backed by falling interest rates scenario. The RBI has already signaled lower interest rate regime going forward. This is positive for the company as with a fall in interest rates, gilt prices rise.

    At the current market price of Rs 18 PNB Gilts is trading at a P/E of 5x and Price/Book value ratio of 0.7x FY01 earnings. The company has declared 18% dividend in the current year, which works out to a tax free dividend yield of 10.2%. It has a track record of paying dividend in the range of 18% - 22% in the last four years. The company's future performance is dependent on interest rate scenario. Although, the current trend is southward, a stable or a slight rise in rates could adversely affect financials to a certain extent.

     

     

    Equitymaster requests your view! Post a comment on "PNB Gilts: Interest rate play". Click here!

      
     

    More Views on News

    HDFC: Red Flag in Developer Loans (Quarterly Results Update - Detailed)

    Aug 10, 2017

    HDFC starts FY18 on robust loan growth but asset quality slips on increased exposure to developer loans.

    Shriram Trans Fin: FY17 Ends on a Tepid Note due to Regulatory Headwinds (Quarterly Results Update - Detailed)

    Jun 22, 2017

    Demonetisation led slowdown coupled with shift to stringent bad loan norms keep Shriram Transport Finance on a slow wicket.

    Power Finance Corp: Alignment with RBI Norms Knocks Down FY17 Earnings (Quarterly Results Update - Detailed)

    Jun 14, 2017

    Power Finance Corporation earnings hit by RBI mandated higher provision on state government power generation projects where the recovery continues to be 100%.

    IDFC: Ends FY17 on a Healthy Note (Quarterly Results Update - Detailed)

    May 30, 2017

    IDFC regains its tempo in FY17 post the demerger of the banking business.

    HDFC: Conservative Provisioning tempers down FY17 earnings (Quarterly Results Update - Detailed)

    May 9, 2017

    HDFC ends FY17 on a tepid note as it remains conservative on the asset quality front.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    PNB GILTS SHARE PRICE


    Aug 21, 2017 01:51 PM

    TRACK PNB GILTS

    • Track your investment in PNB GILTS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    PNB GILTS - POWER FIN CORP COMPARISON

    Compare Company With Charts

    COMPARE PNB GILTS WITH

    MARKET STATS