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Saturday, September 11, 2010

Stock report : Corporation Bank

Corporation bank is a good banking sector stock to buy for mid and long term. Let's see why should we buy stocks of Corporation bank in our portfolio.

Corporation Bank is an India-based banking company. The segments of the Bank include treasury operations, wholesale banking, retail banking and other banking operations. The services provided by the Bank include electronic remittances, Internet and mobile banking, Corp New Gen, online educational loan, Corp Invest Shoppe, mobile payment facility, and branchless banking. The Bank offers various types of deposits, which include current accounts, savings bank accounts, fixed deposits, cash certificates, money-flex deposits and recurring deposits.

It offers a range of personalized Non-Resident Indian (NRI) services. During the fiscal year ended March 31, 2010, the Bank had opened 101 branches across the country thereby touching 1155 branches. The Bank has 1079 automated teller machines (ATMs) and 1200 branchless banking units thereby having a total functional units of 3434.

Corporation bank has witnessed 30% credit growth in FY10 which is very good in banking space when compared to other peers. Bank should continue with the same growth rate in future too. This bank traditionally has it's strong client base and expansion only in Southern and Western India. Here they had current and savings account ration of only around 30% Bank's historical Loan to deposit ration was only around 60% Due to these factors, bank had it's Net Interest Margin around 2.5%

Corporation bank has started expanding in North India as well as in Tier II cities allover India. Nonperforming loans of bank are around 1% which is not risky at all. Price to book value is around 1.5 which is good. Dividend yield at current stock price comes to be 2.6% which is not bad.

Market Cap 9114.18
EPS (TTM) 86.64
P/E 7.33
P/C 6.96
* Book Value 402.60
Price/Book 1.58
Div(%) 165.00%
Div Yield(%) 2.60
Market Lot 1.00
Face Value 10.00
Industry P/E 11.57

India's banking and finance sector is only expected to grow from current state of economy. Any good bank should be able to grow reasonably with Indian growth story and fetch good returns on investment.

Considering the expansion, margins for bank should grow in future. This stock did not participate much in recent banking rally. Current stock price is at Rs. 635. If any correction takes place in stock market, Corporation bank is definitely a good banking sector stock to buy around 500 to 550 stock price levels for long term.

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