Investment Ideas - ING Vysya Bank

ING Vysya Bank is one among the prominent Private sector Banks operating in India. The incorporation of the bank was done in the year 1930. In the year 1945, it became a Scheduled Bank. The bank was formed in the year 2002, by the acquisition of an equity stake in then known as Indian Vysya Bank by the Dutch ING Group. This acquisition is probably the first between an Indian bank and a foreign bank. Earlier the Vysya Bank had an alliance with a Belgian bank Banque Bruxelles Lambert. This bank was acquired by ING Group in 1998. The ING Vysya Bank Limited as it is known today is providing services in four segments, namely Treasury, Retail Banking, Wholesale Banking and Other Banking Operations. The Treasury segment deals with investment related to bonds, Mutual funds, Debt market, Derivatives and Forex. The Retail banking segment refers to its business related with Individuals Automated Teller Machines and Internet Banking. The Bank’s wholesale Banking is actually the business it does with large companies, Loans and Institutional operation.

The bank has a well spread network of 527 branches. The bank employs about 10,000 people catering to its customers.

Some of the important events in the banks history have been listed below:

In the year 2000, the Vysya Leasing Ltd became a subsidiary of the Bank. A Data Centre came up at IT park Bangalore in November 2000. The year 2001 saw the promotion of a company by the name ING Vysya Life Insurance Company Ltd. This company was responsible for the Bank’s life insurance business in India. The year 2002 was eventful year for the Bank. They launched new products and services like Vsya Vyapar Plus, ATM services, hospitalization insurance cover, Debit cards, and Net banking services. This was the year in which the ING took over the complete management of the Bank. During the year 2003-2004 the Bank launched insurance products, Mutual funds business.  In the year 2003 the bank divested their stake in Vysya Bank Housing finance Ltd to Dewan Housing finance Ltd. Also in 2003 the Bank issued Tier II Bonds to the tune of Rs. 200 Crores. In the year 2005-2006 the Bank divested its   stake of 14.87 % in Vysya Life Insurance Company to Gujarat Ambuja Cements.

In April 2007, the Bank sold their entire shares held in Investment Management (India) Pvt Ltd. The parent Bank ING Bank N V was seen investing in the Tier I issued by ING Vysya Bank Ltd, by way of Innovative Perpetual Bonds (IPDs) in foreign currency. The value of these investment totaled Rs 94.50 Crore with a call option at the end of a 10 year period.

According to available data, the Bank’s major source of income is interest earned is 4861.58 which is 1004.77 Crores more than last year. With other income the total income stands at 5588.46 Crores. Expenditure has been disclosed as 3322.95 Crores. Operating and Administrative expenses are 221.27 Crores. Cost of depreciation is 50.97 Crores.  The Bank’s total net profit has been reported as 612.96 Crores. The EPS is currently at Rs. 38.69

The Bank has been consistently paying good dividends to the investors. In the last five years starting from 2009 it has been seen paying higher dividends (20%, 25%, 30%, 40%, and 55%). The dividend record seems to be good.

The declared Dividend is 55%. The Book value of this share is 292.10.

The Bank’s shares are constantly on an uptrend mode the shares that were trading at Rs. 330 last year (31-06-2012), are trading at Rs. 650 (31-06-2013). Investors with a longer time frame can take a look at this banking company’s shares. Even with a shorter time frame, this could be a profitable investment.

 

Investment Ideas - Marico Limited

 Marico Limited (ML)

Marico Limited (ML), is one of the leading Fast Moving Consumer Goods (FMCG) player in the Indian Market. The company was incorporated in the year 1988.at the time of incorporation it was known as Marico Foods Limited. The name Marico Industries Limited came into being in the year 1989. . In the year February 2004 there was an  Amalgamation of Anandita Arnav Trading & Investment Private Ltd, Madhav Nandini Trading & Investment Private Ltd, Rajvi Rishabh Trading & Investment Private Ltd and Rishabh Harsh Trading & Investment Private Ltd.

Marico's Products and brand names are well known to the Indian household. Brands like Parachute, Saffola, Kaya, Sundari and Fiancee enjoy good consumer confidence and trust. Significant market share is enjoyed by these products.  Marico has built up extensive marketing network more than 20 countries in the Middle East, Asian sub-continent, Australia and USA.

In 1989, the company acquired  Rasoi Industries Limited. In 1990, the company entered into an agreement with Bombay Oil Industries Ltd (BOIL) for the use of the brands Parachute and Saffola. The Company established a new plant in Kerala to manufacture Parachute Coconut Oil. This is a good location because Kerala is a state with large coconut plantations. The Kerala unit has the capacity to produce  24000 tonnes of coconut oil per annum. In the year 1995, Marico acquired the Brand SIL' from KFL.

Marico introduced two products in 1997  Sweekar cotton seed oil and Sweekar mustard oil. The company established two separate production units one at Jalgaon to process the cotton seeds and another one at Jaipur for the mustard oil. in the year 1998 the Company made the joint venture between a Lever group company and Nissin of Japan enabling its products distribution through HLL's networks. Marico acquired the company Sundari LLC in 2003 In the year of 2004, the company launched new products like Silk-n-Shine.

In the year 2006, Marico acquired Hindustan Lever Limited's Nihar for Rs 216 crores. In the following year, the company forayed into South African market. Marico also acquired the consumer division of Enaleni Pharmaceuticals. In the year 2008 Marico made some change in the business style. It sold its processed foods business, Sil' to Good Food Group.  By making correct decisions on acquisitions and mergers the company has managed to corner a market capitalisation of 14,772.37 Crores, which is very impressive and third largest after Godrej and Dabur. 

As on 30^th April the following Mutual funds have invested in Marico. 

Franklin India Prima Plus - (G)                                           1854.40 Cr

Birla Sun Life Midcap Fund - Plan A (G)                           1096.97 Cr

HDFC Mid-Cap Opportunities Fund (G)                            2647.68 Cr

UTI-Dividend Yield Fund (G)                                              3302.10 Cr

Looking at the available financials Marico has seen growth of 9.7% yoy during Q4 FY13. Revenue from international business seems to have declined by 1%. Profit before tax has increased from last year’s 1088 to 1189 Crores. The profit after tax has been adjusted to 507 which is lower than the last years’ 714 Crores. Profit after tax (PAT) is adjusted to 5.1%.

According to the available financial data, the material cost has declined from that of last year. The personnel and advertising cost have slightly increased form that of last Q4. 

Marico believes in the coming FY14, it could see larger volume growth. The company’s interest costs remain unchanged from that of last year. However this could be reduced in the coming FY14.

At the time of writing this note the shares of the company had closed the trade at 229.75. Since the beginning of this year this stock has been moving sideways. This stock is ideal for short term investors. For traders I would say  a buy could be initiated around Rs. 213, which is a good support. A target of 237 can be marked for exiting the stock.