Future of NBL

[Tariq]

This is a promising bank which is usually liked by investors. It had a huge price hike recently though became a bit slow due to recent fall. It was below 500 in last Mar after declaration of bonus, enjoyed a continuous uptrend, Split at 81.8 on September and had a huge hike up to 175 within only 2 months. Its future... will be guided by the followings:

1. Its paid up capital is 441 crore against auth capital 600. This speaks that it is not on hurry to raise its capital – so there is a remote possibility of issuance of rt share. But good news is that it has a thin capital gap for fulfilling the requirement of Basel II (600 crore by Dec’11). This means – it can do it by a handsome bonus declaration (It has a good previous record-normally more than 50%), not by bond really.

2. Its fundamentals r very good in comparison to other banks which makes it the 2nd best bank after AB.

3. Its 9 month’s profit is 332 crore which is likely to be raised up to 460 crore and this will make 104% of the paid up capital. So this time what should be our expectation? 70% or 80%?



Now its future price: The recent fall has become a blessing in disguise for this bank. Some old and experience share holders took profit from this share. They will again come back since they got the taste. At the same time due to the fall, many new investors r also slipped in.

It had a price hike after its 3rd qtr declaration. Same will be happening after yearly profit declaration- we should not be surprised if it reaches 250 mark by then. It will have a continuous uptrend thereafter since its investors will smell its bonus by mid Mar. To my assessment, its price would be then 320-350.