Every investor must analyze the company before buying and selling of any shares. Good analysis of the company helps to make their portfolio green but when forecast goes wrong then, one has to suffer from huge losses.
While doing analysis, one should take the financial data of the past report of the company. But one must also be responsible to adjust the necessary changes in those data to get true and fair view of the company.
The recently announced 100% bonus shares by Standard Chartered Bank Nepal Limited (SCB) has increased the importance of such analyses. This article will help all our visitors to know in which leading commercial bank—namely Everest Bank Limited (EBL), Nabil Bank Limited (NABIL), Nepal Investment Bank Limited (NIB) and Standard Chartered Bank Limited (SCB)— should they include in their bucket list of portfolio.
Below table is prepared on the basis of first quarter unaudited report of the FY 2074/75 as published by the respective banks:
Note 1: *Bonus shares announced by the company is adjusted in the Paid Up Capital)
(Note 2: **Amount of bonus shares has been deducted from Reserve to know real Net worth per share)
From the above table, after paid up capital of Rs 8 arba and more by the banks, EPS will drastically fall (incase of EBL and SCB mainly). To maintain the EPS constant as before, banks must focus on the deposit collection and lending. If bank fails to achieve impressive growth in these two factors then it will be harmful for the shareholders as banks will be unable to earn good profit.
The paid up capital of EBL & SCB will reach to Rs 8.13 arba and Rs 8.01 arba after adjustment of 33.33% bonus shares and 100% bonus shares respectively which hampers bank’s EPS to shrink to Rs 26.14 & Rs 24.09 respectively. But EPS of NABIL and NIB will hover around Rs 42.34 & Rs 34.31 though their paid up capital had already reached Rs 8.04 arba & Rs 10.62 arba. They both have outstanding collection of deposits and have lend loans also more than EBL and SCB.
Talking of Market Price (MP) after bonus share adjustment, MP of EBL and SCB will be adjusted to around Rs 910 and Rs 1,125 respectively. Thus, SCB and EBL, whose EPS are lower than that of NABIL and NIB, will be more expensive.
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