Expect bond yields to remain between 6.35-6.55%: PNB Gilts

PNB Gilts posted a strong set of earnings in the first quarter ended June, driven by G-Sec's & Corporate Bonds. The total income was up 25.5 percent at Rs 123 crore versus Rs 98 crore reported same quarter last fiscal. Similarly, Year on Year (YoY) net profit was up 34.9 percent at Rs 13.4 crore versus Rs 10 crore.

The G-Sec revenues were up 111.4 percent YoY at Rs 73.6 crore versus Rs 34.8 crore. The YoY corporate bonds revenue were up 82.5 percent at Rs 18.8 crore versus Rs 10.3 crore.

Talking about the excellent Q1 performance, SK Dubey, MD, PNB Gilts said the average size of the book is around Rs 5000 crore and the average duration is three and half years.

Their held to maturity is at around Rs 700 crore, said Dubey in an interview to CNBC-TV18.

The market has factored in a 25 basis points rate cut by RBI in August policy and so the cost of funds for Q1 were at 6.1 percent currently compared to 6.49  percent for the same quarter last fiscal, he said.

Out of the total profits of Rs 38.53 crore, the trading profits are Rs 34 crore and the rest is interest, said Dubey.

According to him, the bond yields during Q1 decline 15 basis points but post that they have moved a bit and so are likely to range between 6.35-6.55 percent.