With broad market valuations looking a tad expensive, undervalued stocks such as Vijaya Bank found buyer’s interest during the first half of 2010. In January 2010, the stock was trading at less than its book value as against 1.7 times book valuation commanded by CNX PSU Bank index. The stock delivered a 79 per cent return in the last one year even as it lost 22 per cent from its peak (November 2010
Improving operating performance of the company and capital infusion by the government also aided the stock’s rally. It received Rs 1200 crore in two tranche over the last two years and may benefit from another round of capital infusion. The net interest margin of the bank improved from 2.65 per cent in December 2009 quarter to 3.45 per cent in December 2010, thereby, improving the return on asset (annualised) ratio which stood at 0.88 per cent for the nine months ended December 2010. It is noteworthy that the return on assets stood at a mere 0.36 per cent for the nine months ended December 2008. While the earnings growth was strong, balance sheet growth continues to be muted when compared with its peers.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.