Wednesday, October 09, 2013

Dena Bank Ltd: Slowly Coming Out of Bearish Phase
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Chartical Analysis: In case of Dena Bank Ltd (Rs.48.75), its 21DSMA > 50DSMA, which gives some indication, that the bearish phase is starting to get over. Moreover, MACD and Oscillators are also in the buy zone.
Fundamental Analysis: Mid-sized public lender Dena Bank joined its larger peers today in trimming lending rates on a slew of products following nudging from the Finance Ministry.
The bank will offer home loans up to Rs.1 crore at base rate of 10.25 per cent and those above it at the interest rate of 10.50 per cent. It is offering a combo loan for car and consumer durables with housing loan. Car loans with housing one will be offered at 10.25 per cent up to Rs 1 crore and at 10.50 per cent above Rs 1 crore. The decision to cut interest rates on auto and consumer durable loans comes nearly a week after government decided to pump in funds in PSU banks to enable them to lower rates to stimulate demand in the targeted sector. Recently, the Finance Minister Mr.P.Chidambaram opened Dena Bank Ltd's 1500th Branch in Thirupuvanam, Sivagangai District, Tanil Nadu, in the presence of Mr.Ashwani Kumar, CMD and Mr.A.K.Dutt, ED. CLICK HERE.
For Q1FY14, the total income of the company out to be Rs.2765.68 Cr as against Rs.2278.85 Cr. The Profit Before tax increased to Rs.586.23 Cr in Q1Fy14 as against Rs.457.92 Cr in Q1FY13. However, due to higher tax component the net profit came down to Rs.189.20 in Q1Fy14 as against Rs.238.63 Cr in the same period previous year. The EPS of the company for Q1FY14 came out to be Rs.5.40 as against Rs.6.82 in the same period previous year. Also, sequentially speaking the Q1FY14 results of the company are quite satisfactory, when the NPM improved from 5.45 % in Q4FY13 to 7.88% in Q1FY14.
With the banks tightening norms for restructuring and government of India agreeing to provide enhance capital to PSU bank from Rs.14000 crore it had committed in union budget, we can expect the bank to clock an EPS of Rs.10-12 in FY14. This gives the scrip a target of Rs.80-90, in the next 6 months time frame. A strong buy is recommended in the counter.