Castles in air are not built over night. It seems that the story around Kotak has taken a bit of time to build.
There is no denial to the fact that Kotak is perhaps best bank in India. They are also well placed to grow faster than almost everyone.
But then a PE of 60+ does not stand the test of reasonableness.
Another BS which one hears a lot now a day is the "Dividend should guide your stock selection". YES, this is correct, but not in India
Consider this, imagine EBIDTA of 100, then 33 as profit tax (assuming no depreciation), to declare dividend the company pays, 17% DDT
PAT = 67
CF to shareholder after Div = .83*67 = 55 (approx)
So, effectively the company is destroying value by declaring dividends, it is literally handing over the money to the "Government of India" not to the shareholders.
So, in a country like India, declaring dividends is not very wise steps. Then there are companies, which have found ways around. I have identified couple of these small and mid caps.
There is no denial to the fact that Kotak is perhaps best bank in India. They are also well placed to grow faster than almost everyone.
But then a PE of 60+ does not stand the test of reasonableness.
Another BS which one hears a lot now a day is the "Dividend should guide your stock selection". YES, this is correct, but not in India
Consider this, imagine EBIDTA of 100, then 33 as profit tax (assuming no depreciation), to declare dividend the company pays, 17% DDT
PAT = 67
CF to shareholder after Div = .83*67 = 55 (approx)
So, effectively the company is destroying value by declaring dividends, it is literally handing over the money to the "Government of India" not to the shareholders.
So, in a country like India, declaring dividends is not very wise steps. Then there are companies, which have found ways around. I have identified couple of these small and mid caps.
No comments:
Post a Comment