NTB should do well Dec quarter and especially the budget benefits should further kick in March quarter.
We saw NTB.N shoot to Rs 115, 3 months ago and now is at Rs 85. We also saw in a recent irregular event NTB.N shot up to Rs 99 in a hurry and came down within few minutes. It means there is considerable interest in the share but buyer do not want to commit when it remains stagnant.
Going with last 2 quarters EPS annualize ( indicative of a the future performance) the share can be valued
fairly valued at 3.05*2*15= Rs 92
However with the clear growth with a higher EPS expected in Dec quarter and from the above facts it might be no surprise if NTB runs to Rs 110-120 in a rally again ( if it happens). We have seen this happen in the current market with other shares with expected future growth. ( TAFL, GRAN, ODEL etc).
There are 209 Mil Share of NTB in the market. 77.84% share holding lies with the top 20 share holders. Only 22% odd remains with smaller holders.
Note on the NTB Warrrants:
NTB warrants can bring higher gain than NTB is a rally.
When NTB went to Rs 115 some months ago NTB.W reached around Rs 90 at that time ( as warrant usually do it overshoots a little in a rally).
But note the below discussion as warrant are higher risk higher gain category.
Concerns with EPS dilution due to warrants :
Compared 209 Mil NTB.N , NTB.W are around 20 Mil shares only. Thats only about 10%. With warrant conversion rate added ( Rs 35) we cannot expect a massive dilution to the share EPS compared to many other companies with higher warrant issues. So I feel the Warrant issue should not drag down NTB in the medium to longer term . Please compare with other companies to see what I mean. The new fad is to issue 1:1 warrants to share atelast. But NTB is only 1:10 which is not bad.
With a finance bank rally ( if it happens) NTB warrants are bound to go up with NTB.N. But we still did not see a major bank rally. Warrant can bring you higher gain than the share if it happens.
Having said that , I believe the warrant conversion to happen sometime end of February. So before then if bank rally happens it will also go up. If a bank rally does not happen there is a small risk involved as warrants will trade with a small premium as in most cases.
By the way I hold NTB.N & NTB.W. I wanted to give fair picture only to benefit the community and am not recommending a Buy ,Sell or Hold This is for analysis only.
Last edited by slstock on Mon Jan 31, 2011 3:10 am; edited 1 time in total