Playing Andhra Bank : Range 35 to 86 : #andhrabank #publicsectorbanks

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Andhra Bank has a Current P/BV of 0.39 and is one of the few PSU banks which has maintained a positive P&L consistently .

#AndhraBank #publicsectorbanks

 

The lowest P/BV seen has been around 0.28 , basis which the lower end of the range shifts towards 37.40 . The Higher range shifts towards 0.40 to 0.65 times P/BV which portends to a price range between 53.42 to 86.81 .

For passive investors a capital allocation of 40% at current price and then averaging towards as close 37.40 with a view to sell into the higher range ina a few months seems a prudent strategy  for a greater than 12% return per annum.

Leveraged aggressive  investors who are comfortable with running draw downs and options , a strategy could be at the right price levels to build positions in out of the money puts while going long the futures   with an objective to rollover positions to exit at a higher end of the price range over the coming months ;while controlling the leverage ratio .In case of a drastic quick fall the options should provide a bit of cushion.

The underlying will be volatile and is very prone to large fast moves since the free float  market cap is only around  1290 crores. Fundamentally the stock is better placed than peers most of whom are at multiples of greater than 0.45 times book value. The below table compares a few peers .

  Andhra Bank Central Bank of India Dena Bank Oriental Bank of Commerce
         
CMP 52.65  95.00 30.80 127.30
Book Value/ Share 133.56  71.07 64.97 351.85
Price/BV 0.39  1.34 .47 0.36
M Cap ( crs) 3,590  18,070 2,428 4,407
Free) Float M cap ( crs) 1,290  2,530 850 1,807
Shareholding Pattern( Jun 17)%   
Govt 69.77  81.38 70.04 58.38
Institutions 16.24  14.39 19.76 24.92
Others 13.99  4.23 10.20 16.70
 
FY17 operating Profit  4,388 3,089 1,390 4,170
FY 17 PAT 174  -2,439 -132 -1082
NIM FY 17 3.07%  2.51% 2.00% 2.42%
Total assets 1,44,232  1,53,008 77,538 1,66,438
Total NPAS 17,670 (12.25%)  27,251
(17.81%)
12,619
(16.27%)
22,859
(13.73%)
PCR FY 17 51.03%  58.43%  50.56% 53.61%
 
 Jun 17 Operating profit 1,369  451  288 1008
 Jun 17 PAT 40  -577  -132 -486
 NIM Jun 17 3.12%  1.95% 2.44% 2.19%
Total Assets Jun 17 1,45,801  1,72,198  74,807 1,64,577
Total NPAs Jun 17 13,509
(13.33%)
 31,398
(18.23%)
 12,994
(17.37%)
24,409
(14.83%)
PCR Jun 17  51.73%  54.48%  51.72% 54.68%
 
CET 1 Jun 17 7.45%  6.17%  9.19%( maybe inc addtnl) 7.24%
Additional Tier 1 Jun 17 1.44%     1.29%
Tier II Jun 17 3.09%  3.74%  2.46% 2.72%
Total CRAR Jun 17 11.98%  9.91%  11.65% 11.25%
 
Branches ( Jun 17 ) 2,908 4,716  1,874 2,376
ATM/BNA/CR 3,928  5,267  1,538 2,607

Disclaimer : This is not investment advice but a generic article for reading purposes. Readers are strongly encouraged to verify facts and seek opinions of registered financial advisors. At any point of time FFSPL may or may not have positions in asset classes/ specific assets , being or not being contents of this publication/presentation/article.

 

 

 


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