Today's Pick - Central Bank of India

We recommend a sell in Central Bank of India from a short-term perspective. It is evident from the charts that the stock has been on an intermediate-term downtrend from its 52-week-high of Rs 154 recorded in early January 2008. However, after marking a one-year low at Rs 73 in March, the stock began moving higher till it encountered resistance at around Rs 100 level.

Subsequently, the stock failed to exceed that resistance level and resumed the downtrend. The daily and weekly relative strength indices are featuring in the bearish zone. Besides, the moving average convergence and divergence has re-entered the negative territory indicating bearishness. The stock is also trading well below the 21 and 50-day moving averages at present. In the short-term, we are bearish on the stock and expect it to decline further until it hits our price target of Rs 78 in the coming days. Traders with short-term perspective can sell the stock while keeping the stop-loss at Rs 89.

via BL

Bharti Airtel, ICICI Bank, ABB, Canara Bank, Corporation Bank, Central Bank, Real Estate Sector, Mahindra Lifespace Developers

Bharti Airtel, ICICI Bank, ABB, Canara Bank, Corporation Bank, Central Bank, Real Estate Sector, Mahindra Lifespace Developers

Today's Pick - Central Bank

We recommend a buy in Central Bank of India from a short-term perspective. The charts of Central Bank of India show that the stock was on a medium-term downtrend from its life-high of Rs 154.9 marked in early January 2008 till its mid March low of Rs 73.

More recently, the stock’s medium-term downtrend got arrested at around the support level of Rs 74.

The stock gained momentum by surging more then 11 per cent on March 25, initiating an up move. The positive divergence in the daily Relative Strength Index has supported the stock’s trend reversal. This indicator is rising towards the bullish zone in the neutral region. After penetrating the medium-term down trendline, the stock crossed over the 21-day moving average recently, signalling a buy.

Moreover, we also note a crossover in the moving average convergence divergence indicating a buy. Our short-term outlook for the stock is bullish. We expect the stock to rally further to our target level of Rs 102 in the short-term. Investors with a short-term perspective can buy the stock with a stop-loss at Rs 85.

Via BL

BHEL, Tata Steel, Bharat Electronics, Central Bank, Dish TV, Dishman Pharma, Jyoti Structures, Suzlon Energy, India Economy

BHEL, Tata Steel, Bharat Electronics, Central Bank, Dish TV, Dishman Pharma, Jyoti Structures, Suzlon Energy, India Economy

BHEL, Central Bank, Cipla, Dr Reddys, Glenmark, Grasim, HCC, Kotak, LT, Marico, Union Bank of India, Voltas

BHEL, Central Bank, Cipla, Dr Reddys, Glenmark, Grasim, HCC, Kotak, LT, Marico, Union Bank of India, Voltas

Central Bank, CCCL, Reliance Industries, HCL Technologies, Ranbaxy Labs, Godrej Consumer Products, HT Media

Central Bank, CCCL, Reliance Industries, HCL Technologies, Ranbaxy Labs, Godrej Consumer Products, HT Media

Central Bank, IVRCL, Mahindra and Mahindra, Punj LLoyd, Sterlite Industries, Tata Chemicals

Central Bank, IVRCL, Mahindra and Mahindra, Punj LLoyd, Sterlite Industries, Tata Chemicals

Educomp Solutions, Central Bank

Educomp Solutions, Central Bank

Central Bank Bulk Deals

21-AUG-2007,CENTRALBK,Central Bank of India,CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED,BUY,8859294,127.67,-
21-AUG-2007,CENTRALBK,Central Bank of India,FID FUNDS (MAURITIUS) LIMITED,BUY,2931988,130.54,-

Central Bank in F&O segment

NSE has included Central Bank of India (CBI) in futures & options (F&O) segment from the day of the stock’s debut in the cash segment on Tuesday, 21 August 2007. The lot size of CBI in F&O is fixed at 2000.

CBI has pan-India presence with branches in 27 states and three Union Territories. At dnd March 2007, the bank had 3,194 branches, the third largest network of branches in India.

CBI reported net profit of Rs 498.01 crore on net total income of Rs 2950.07 crore in the year ended 31 March 2007 (FY 2007). Profit for FY 2007 includes recovery/write back of provisions of Rs 163.33 crore.

Central Bank Listing

Central Bank will list on August 21 2007

Ashok Leyland - Buy, ICICI Bank - Buy, Cipla - Sell, Garware Wall Ropes - Buy, Central Bank of India

Ashok Leyland - Buy, ICICI Bank - Buy, Cipla - Sell, Garware Wall Ropes - Buy, Central Bank of India

Central Bank Subscription Details

Qualified Institutional Buyers (QIBs) - 89.1157 times

Non Institutional Investors - 69.5761 times

Retail Individual Investors (RIIs) - 16.2027 times

OVERALL - 62.07 times

Central Bank IPO Note - 23 Jul 2007

Central Bank IPO Note - 23 Jul 2007

Central Bank of India — IPO: Avoid

Central Bank of India (CBI) is among the last of the nationalised outfits to make a public offer of capital as part of the overall restructuring in PSBs. This restructuring plan has been in operation for close to a decade now and most nationalised banks have already made public offers of capital.
CBI wrote off around Rs 680 crore of accumulated losses against capital in March 2002 and, more recently, in March, restructured its capital base of Rs 1,124 crore to include a perpetual preference share component of Rs 800 crore.
The per share earnings on the reduced equity base of Rs 324 crore based on FY-2007 earnings work out to Rs 13.11. At the lower end of the price band (Rs 85), the offer price discounts the FY-07 EPS by about 6.5 times and at the higher end of the band (Rs 102), by 7.8 times. Valuations vis-À-vis peers
The issue price may not appear aggressive, given the overall market valuations. But it is certainly so in relation to the valuations enjoyed by other PSBs that have a much better performance profile. The trend in the bank’s income and profit performance has not been consistent.
While total income has grown at a CAGR of 7 per cent over the past three years, net profits have shown an uneven trend, declining from Rs 620 crore to Rs 504 crore over the same period. The performance record of CBI and the state of its financials do not give the confidence that the stock can be a good buy-and-hold investment. Similar revamp plan
In recent times, Indian Bank was another public sector bank which followed a similar capital revamp plan as that being put through by Central Bank now. But Indian Bank’s financials were in far better shape at the end of all the business and capital revamp efforts over of the past five years and its business prospects, therefore, appeared good enough to consider an investment exposure.
Central Bank of India appears to be placed in a competitively weak position vis-À-vis its public sector peers on many parameters.
The low level of information technology penetration (which has a bearing on the quality of the database/MIS for driving business — only around 35 per cent of the bank’s business is covered under CBS), the locational profile of the branches (more than 50 per cent in the eastern/central regions which traditionally have not been attractive from the business point of view), the compositional make-up of the assets dominated by lower yielding corporate/commercial loans (75 per cent of total loans is corporate/commercial, retail is 10 per cent whereas in other PSBs, the proportion is skewed more in favour of higher yielding retail loans) the still relatively higher level of NPAs on the books (net 2.6 per cent as of March 2007 against sub-1 per cent for the peers) are all factors that can inhibit good medium-term financial performance. No significant upside
From a stock market perspective, relatively stronger PSBs such as Canara Bank, Corporation Bank, Bank of India, Union Bank of India, Indian Overseas Bank and Indian Bank — a set that can be broadly compared with Central Bank of India in terms of size — are even now (at the high overall market levels), trading in a P/E band of 7 to 11.
There appears to be a certain drag with respect to the valuations of the core group of public sector banks listed above in relation to the multiples enjoyed by their private sector counterparts. In such a situation, it is difficult to see a significant upside for any exposure in the CBI stock.
Offer details: Central Bank of India is entering the market with a public issue of eight crore shares in the price band of Rs 85-102 per share.

Grey Market Premiums - Omnitech, Zylog, Central Bank, HDIL, Omaxe

Allied Digital 190 135 to 140

Everonn Systems 125 to 140 390 to 400

Alpa Labs. 62 to 68 No premium - trading at discount

Simplex Projects 170 to 185 155 to 160

Spice Communication 46 9.50 to 10

Surychakra Power 20 2 to 3

HDIL 500 31 to 32

Celestial Labs 60 11 to 12

Omaxe Ltd. 265 to 310 55 to 60

Omnitech Info 90 to 105 160 to 165

Zylog System Ltd. 330 to 350 200 to 210

Central Bank 85 to 102 15 to 20

Central Bank IPO band at Rs 85-102

Central Bank of India, the 96-year-old government-owned lender, has fixed a price band of Rs 85-Rs 102 per share for its initial public offering of 8 crore equity shares, which will open for subscription on July 24 and close on July 27.

The bank will raise Rs 680 crore to Rs 816 crore through the issue. After the issue, government holding would come down to 80.2 per cent.

Qualified institutional buyers (QIBs) will be allotted at least 60 per cent of the issue. Of this, 20 per cent will be reserved for overseas investors and 5 per cent for mutual funds.

The retail portion has been fixed at 30 per cent of the net issue. Non-institutional investors can bid up to 10 per cent of the net issue. The bank will complete the allotments by August 11. Proceeds from the issue will be used to meet the additional capital requirements under the Basel II norms and to grow the bank’s assets.

“We should be in place to adopt the Basel II norms by March 31, 2008, though we are required to adopt the norms by March 31, 2009. Our capital adequacy ratio will fall by 1.25 per cent on account of operational risk under Basel II,” said H A Daruwalla, CMD of the bank.

The bank’s capital adequacy stood at 10.4 per cent at the end of March 2007.

The bank’s net worth was Rs 3,303.9 crore on March 31, 2007.

“Our capital adequacy will go up by 1 per cent after the issue to 11.81 per cent. Tier I capital will go up from 6.32 to 7 per cent,’ said Daruwalla.

The shares will be listed on the Bombay and the National exchanges.

ICICI Securities Primary Dealership, Citigroup Global Markets India, Enam Financial Consultants, IDBI Capital Market Services and Kotak Mahindra Capital Company, are the lead managers to the issue.