Remain invested in Dhanlaxmi Bank: Rajesh Agarwal

Rajesh Agarwal, Head of Research, Eastern Financiers advises to remain invested in Dhanlaxmi Bank.
 
Agarwal told CNBC-TV18, “Dhanlaxmi Bank- averaging at this point of time is not recommended because if you look at the performance, the performance has been little better in the last two quarters but still it doesn’t – it is not that good to be recommended as a buy, but going forward we feel that the stock can do something better because once the banking regulations guidelines comes into effect there would be lot of merger and acquisition in this sector.”
 
He further added, “On the valuation parameters this bank is quoting at a very low valuation of around Rs 400 crore odd with existing branches of around 275. That puts per branch valuation at around Rs 1.5 crore, while other peer group banks branches have a valuation of Rs 4-5 crore. Hence we think that once those guidelines come into effect that would be big positive for this bank because lot of banks would rush to take over this considering the low valuation but till then I don’t feel that there would be any major action on the stock. So, it is better to stay put with your existing position, don’t add to it and once the performance improves or there is some clearance on the guidelines then one can add to this stock. At this point of time stay put with your positions and don’t add to it.”