Bank of Maharashtra (BSE code 532525) is currently trading at Rs 36.20 (52-week high/low Rs 97/Rs 30). Since its inception in 1936, Bank of Maharashtra is rapidly expanding with an aim to cater to the common man with higher penetration to the rural areas. The bank has 1,375 branches with major presence in the state of Maharashtra. The bank has a deposit base of Rs 42,091 crore in Q1FY09, which has grown from Rs 34,250 crore in the corresponding previous year with growth of 22.89 per cent, whereas the gross advances stood at Rs 29,999 crore against Rs 24,131 crore with a growth of 24.32 per cent. For Q1 FY09, the bank has posted a topline of Rs 1,040.68 crore as compared to Rs 872.822 crore in the corresponding previous quarter with a growth of 19.23 per cent, where the bottomline stood at Rs 46.63 crore as compared to Rs 81.58 crore which has declined by 42.84 per cent in the same period on account of higher depreciation on investment portfolio caused by market forces. For the Q1FYO9, the bank has reduced its gross NPA to 2.49 per cent from 3.36 per cent in the Qi FY08 and net NPA has declined to 0.86 per cent from 1.19 per cent during the same period. The bank has managed to increase its core business, but revenues from other income as well as net profit margin has declined in the last four quarters. However, the bank’s cost of fund has increased to 6.04 per cent in Q1FYO9 from 5.60 per cent in Q1FYO8 due the decrease in the CASA ratio which was 40.08 per cent in Qi FY09 as compared to 41.27 per cent in Qi FY08. Again, the capital adequacy ratio of the bank stands at 10.97 per cent against 12.03 per cent in the same period. Looking at the valuation part, the counter is available at PB ratio of 0.88 per cent, which is above industry average of 0.86 per cent, which makes it unattractive compared to its peers. Taking into consideration the volatility in the interest rate and negative sentiments in the market towards the banking sector, we suggest the investors to exit if you are looking at short-term but if your outlook is long-term then you should hold the scrip.
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