Prof Shivanand Mankekar is one of the most reclusive whiz-kid investors you will ever meet. Unlike other stock pickers who love to tom-tom their achievements, the Prof keeps a low profile and does not want the World to know what he is up to.
Of course, the Prof’s reclusive temperament is no barrier because our prying eyes are adept at ferreting out sensitive and top-secret information. We are privy to most of the Prof’s activities on the stock market.
Lakshmi Vilas Bank, a small-cap with a market capitalisation of only Rs. 1,728 crore, is one of the Prof’s all-time favourite stocks. As of 30.09.2015, the Prof (in the name of Kedar Shivanand Mankekar) holds 37,80,000 shares constituting 2.11% of the equity. The holding is worth Rs. 36.28 crore at the CMP of Rs. 96.
Lakshmi Vilas Bank has a number of other marquee shareholders on its rolls such as Morgan Stanley, India Deep Value Fund, Albula Investment Fund Ltd.
The reason, the Prof and the other top shareholders have faithfully held on to the Bank for so many years is because the Bank’s business is growing at a rapid pace of 20% CAGR while the Net Profit is growing at 34% CAGR in the last 5 Years. The best part is that the Bank has undertaken a “re-branding” exercise to convert itself into a “new age” bank with all the bells and whistles required to attract the younger generation of customers.
Daljeet Kohli has summed up the entire story in succinct words in his latest initiating coverage report. He says:
“Lakshmi Vilas Bank (LVB) is a small old generation private sector bank from south India with largely regional operations and especially in the state of Tamilnadu. The bank is able to grow its business at a CAGR of 20% to Rs 383 bn and Net Profit at a CAGR of 34% in the last 5 Years. As of FY15, LVB has network of 400 branches & 820 ATMs. Going forward the bank is expected to grow its presence in urban and metro cities across PAN India. In a bid to shed its ‘old‐generation’ image, LVB has strengthened its top management and has undertaken a rebranding exercise to evolve as a new‐age bank.
Outlook and Valuation:
LVB is on the right track of recovery with improvement in economy. We believe that LVB will continue with its healthy growth, while maintaining its healthy capitalisation and stable asset quality over the medium term. At CMP of Rs 97/‐, the stock is trading at P/ABV of 1.1x and 1.0x for FY16E and FY17E respectively. With improving return profile, we believe it provides attractive risk reward opportunity. Hence we recommend ‘BUY’ rating on the stock with target price of Rs 113, valuing it at 1.3x P/ABV of FY17E (+16% upside).”
So, it does look like, given its pedigree of management, conservative approach and reasonable valuations, Lakshmi Vilas Bank is the ideal “safe” investment one could make with the potential for huge gains going forward.
DCB is better choice.More over DCB bank is also available at attractive price after recent deep correction forced on the stock in name of expansion of bank branches.As of now bank has decided to go slow,so more attractive branches will be opened in first place.So DCB bank is very good long yerm story.Disclosure- I am long term invester in DCB bank stock.
I absolute concur with KHARB.. DCB bank will be a better and established money-minter in the long term say in 4-5 years . It is the best time to catch a stock when a good business is dumped by the market or is not getting investors fancy .
Agree – DCB Bank is value at its CMP of 82. There is no doubt it will give good returns in 3-4 years time.
DCB bank has one of the best management and execution team…they have clear forward path for how they will expand the beaches… This bank always sold with premium valuation… Now it’s on extreme pessimism…. This company is now like Munger’s criteria… Analyst always talking for short term…not for long term like 10 or 20 years…so why all experts have not do dare to advice of buying dcb…otherwise their record will be spoil….but with these management team we can expect this bank to grow like yes or indusind in next 15 to 20 years….this is stocks like munger or lynch
DCB bank has one of the best management and execution team…they have clear forward path for how they will expand the branches
.. This bank always sold with premium valuation… Now it’s on extreme pessimism…. This company is now like Munger’s criteria… Analyst always talking for short term…not for long term like 10 or 20 years…so why all experts have not do dare to advice of buying dcb…otherwise their record will be spoil….but with these management team we can expect this bank to grow like yes or indusind in next 15 to 20 years….this is stocks like munger or lynch
I agree DCB is a great long term buy at CMP. It’s time to get greedy when others are fearful. Moreover there was no reason for such a steep fall. 52 week high and 52 week low were within the same month! Grab the opportunity and keep it for 5 years.
completely disagree with all boarders here as well as DJ Kohli. Both the banks are not even worth a second look. All investments of whoever it may be are going down the toilet. These institutions are no way comparable to big and better run private sector banks or for that matter NBFC like Shriram etc.