Tag: gtl

Categories
CoatTailing

Bank Of India shows which stocks to avoid

When a PSU Bank holds equity stakes in a company, it is usually because the company has defaulted on its loans and the Bank is forced to take equity as part of the debt restructuring arrangement.

This portfolio of Bank Of India perfectly illustrates this:

Symbol Entity # of Shares % Date End
3IINFOTECH BANK OF INDIA 8933208 1.55 201406
AICHAMP Bank Of India 480200 1.75 201406
CRANESSOFT BANK OF INDIA 11291723 9.59 201406
EUROCERA BANK OF INDIA 1023751 3.03 201406
GTL BANK OF INDIA 6099512 3.88 201406
GTLINFRA BANK OF INDIA 78160268 3.38 201406
KFA BANK OF INDIA 8723635 1.08 201406

 

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Categories
Observations

A warning sign that something is rotten

While researching for my Investor Wisdom newsletter,I came across an interesting fact.

If the shareholding pattern of a company has many banks or brokerages, it implies that something rotten is happening.Banks/Brokerages become large shareholders when the company is unable to meet its debt obligations and a part of the debt is converted into equity.

Exhibit one of this phenomenon is GTL.Consider its shareholding pattern as on 31 March, 2013

Bank # of Shares %
BANK OF INDIA 5760424 3.67
ANDHRA BANK 4787185 3.05
PUNJAB NATIONAL BANK 4045570 2.58
IDBI BANK LIMITED 3317412 2.11
CANARA BANK 3296275 2.1
UNION BANK OF INDIA 2769496 1.76
DENA BANK 2741555 1.75
VIJAYA BANK 2654910 1.69
INDIAN OVERSEAS BANK 2433199 1.55
UCO BANK 1854519 1.18
BANK OF BARODA 1684550 1.07
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA 1649828 1.05
INDIAN BANK 1639016 1.04

Banks altogether hold around 24.6% of the company !

Prashant made a great observation-There is not a single private bank to keep the PSU banks company !