More than 100% return from a Reputed Bank within 1 Yr

POSTED BY somasekhararaom ON August 19, 2013 11:25 pm COMMENTS (9)

Dear Jagoinvestors,

 

Within 1 Yr, Investors can easily get min 100% return from Andhra Bank stock.

 

In 2009, This stock was trading at 40/-. Now the current price near to that level. Within 1 Yr, We can expect min 100% return from Andhra Bank.

 

1) Given below link is the Andhra Bank — 1 Yrs Chart

http://postimg.org/image/do0cfpn81/

 

 

From the above chart, Andhra bank high is 130/- while low is 54/-

 

 

 

 

2) Given below link is the Andhra Bank — 2 Yrs Chart

http://postimg.org/image/tref5jafh/

 

From the above chart, Andhra bank high is 136/- while low is 54/-

 

 

 

 

 

3) Given below link is the Andhra Bank — 3 Yrs Chart

http://postimg.org/image/xlntfv3kl/

 

From the above chart, Andhra bank high is 190/- while low is 54/-

 

 

 

 

 

4) Given below link is the Andhra Bank — 4 Yrs Chart

http://postimg.org/image/5r1hk2mmp/

 

From the above chart, Andhra bank high is 190/- while low is 54/-

 

 

 

 

 

5) Given below link is the Andhra Bank — 5 Yrs Chart

http://postimg.org/image/qz6aur6vz/

 

From the above chart, Andhra bank high is 190/- while low is 40/-

 

 

 

 

 

 

6) Given below link is the Andhra Bank — 10 Yrs Chart

http://postimg.org/image/wh4x0dwnr/

 

From the above chart, Andhra bank high is 190/- while low is 40/-.

 

 

 

If we buy this at 60/- and exit at 120/-, our profit will be 60/- (100% profit). In addition, for the last 4 years, This bank has been giving 5/- as Dividends (10% of the current price) on every single share to the investors. It is equal to Bank Fixed Deposits and those dividends are Tax free.

So if you buy at 60/- and sell at 120/- , you will get 100% profit and 5/- as dividend on every share (9.5% of share price). So our profit would be 110% if we sell them after 1 Yrs.

 

 

 

Thanks,

Sekhar

9 replies on this article “More than 100% return from a Reputed Bank within 1 Yr”

  1. PSU banks are not best bets for investment purpose ..following growing NPAs..and situation won’t improve in near term.

    Rather prefer to invest in stocks of private banks.

    PSU banks are best for Fixed deposits and not for investment.

    1. somasekhararaom@gmail.com says:

      Hi Paresh Deshpande,

      You are right. PSU are not best for long term. But at this prices, they are best because they are near to 2009 lows.

      Thanks,
      Sekhar

  2. BanyanFA says:

    A good analysis, however I would suggest some caution on following points and suggest only long term investors with atleast 5 years horizon to enter into any banking stock :
    1. The banks should come up with nasty earnings, both on account of heavy provisions and treasury losses owing to the bond yields.
    2. While Andhra has been a good dividend paying stock, it was not always the case when it paid Rs. 5 per share. It also used to pay around Rs. 2. If profits decline, the bank may not be able to pay that high rate of dividend.

    1. somasekhararaom@gmail.com says:

      Hi BanyanFA,

      You are right. But this bank will pay 5/- as dividends in future also as Govt will force this bank to pay high dividends to reduce CAD or for Liquidity purpose. Because it’s a PSU Stock.

      Thanks,
      Sekhar

  3. Dear Soma, good analysis.

    thanks

    Ashal

  4. somasekhararaom@gmail.com says:

    Dear Investors,

    You can find out Dividend history of Andhra Bank from below links for the last 4 Yrs.

    http://www.rttnews.com/calendar/dividend/31637/andhra-bank.aspx

    http://www.indiainfoline.com/Markets/Company/Background/Stock-History/Andhra-Bank/532418

    The Book Value of this stock is 3 times of current market price.

    P/B ratio is 0.33%
    Company Revenue is 12199 Cr
    Operating Income is 2815 Cr
    Net Interest Income is 3800 Cr
    Total Assets are 1,50,900 Crores.
    Company Networth is 8500 Cr
    Book value is 150/-

    But Market capitalization is just 3000 Cr and the Share price is near to 50/-. That’s Really Funny.

    I think we can keep this stock for the long time (Min 5 Yr), we can get Dividends. That’s it.

    Thanks,
    Sekhar

    1. Mehul Sharma says:

      But Market capitalization is just 3000 Cr and the Share price is near to 50/-. That’s Really Funny

      I think we can keep this stock for the long time (Min 5 Yr), we can get Dividends.

      I don’t understand, can you please a little elaborate these points?

      1. somasekhararaom@gmail.com says:

        Dear Mehul Sharma,

        Large Cap (DII, FII) Investors consider company value as well as Market Cap when thy are investing. If a company book value is higher than the Market Cap value, then they go for investing. Here they will consider many things debt, ROE, EBIAT… etc include Market Cap also. In 2009, Andhra Bank P/E Ratio was 3.5 but now it is below 3.

        For Ex:

        Lets take XXX Company which has market cap of 5000 Cr, and it has a debt in the books is 1500 Cr. In the same sector, YYY company has market cap of 4000 Cr and has no debt. Here YYY is more valued than XXX as it has no debt and total value is 4000 Cr while XXX company value is 3500 Cr.

        I think you got an idea about this.

        Thanks,
        Sekhar

      2. somasekhararaom@gmail.com says:

        Hi,

        For Ex,

        Andhra Bank Share rice is 50/- and you want to invest 1,00,000/-. So u will get 2000 shares.

        Ever year u will get 5/- as dividend. So 2000*5=10000/- as dividends.(Tax Free). Your investment is 1 Lakh and you are getting 10K as dividends. So it means you are getting 10% interest on your investment. It’s more than Fixed Deposit Value. But what about share price after 5 Yrs? Will it stay continuously at 50/- for next 5 Yrs? It’s highly impossible.

        Thanks,
        Sekhar

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