Stock for long term- SBI

Stock for long term- SBI is one of the best stock to be in anyone’s portfolio for long term investment objective. State bank of india is the biggest bank in Indian banking sector and it is still one of the most trusted bank as well. In the last few years, SBI has also revamped its customer service and banking practices to accommodate itself in the rising competition from the private sector banks. SBI had got biggest network in the country and it is still the choice for many banking customers. it is ideal stock for long term.

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Muthoot Finance IPO Analysis

Muthoot finance is quite a familiar name in the gold loan industry. They have made some descent growth in the last few years. Now they are going public and coming with their IPO. It status is RBI registered NBFC non deposit taking which helps it in fund raising. They are offering it at a price band of Rs 160-175. Issue will open on April 18 and will remain open till April 21. Its CRISIL rating is 4/5 and CRA rating is also 4/5. This indicates good fundamentals.

Gold loan industry is growing rapidly in Indian. Muthoot finance is one of the prominent players in the industry. Though there are few uncertainties regarding regime, regulations and competition from banks but muthoot’s track record goes in its favor. It has consistently expanded in the new geographies, its management has shown consistency and the benefit of being early bird in the sector has also helped them a lot.

Muthoot finance provides personal and business loan against gold. Its it has a outstanding loan of Rs13,004 crore as of nov 2010. It has a market share of 19.4 per cent. It is aiming to garner around Rs824-901 crore to fund its business. Existing PE investor will stay invested in the firm, so it is also a good sign for the investors. It has a compounded annual growth rate (CAGR) of 75.7 per cent during FY2006-2010.

Their business model of providing loan at lower interest rates and quickly opening new branches to target new customers has helped them in maintaining high growth.  There is one risk to them and that is they are getting some serious competition from banks like ICICI and HDFC. These banks are now aggressively targeting gold loan business and offering new attractive schemes.

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