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Standard Chartered PLC - IDR

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					                                                                                               Value Pick
                                                                                                 8 July 2011

                                                                                  Time Horizon – 12 Months



Standard Chartered PLC - IDR                      CMP 96                   BUY                     Target 120

                                                  What is IDR? (Indian Depository Receipt)

Key Matrix                                        IDR is an instrument in the form of a Depository Receipt
Price (Rs.)                                  96   created by the Indian depository in India against the underlying
Market Cap (Rs.Crs.)                      2304    equity shares of the issuing company. In an IDR, foreign
52 High / Low (Rs.)                 134.5/85.55   companies would issue shares, to an Indian Depository (say
BSE                                     580001    National Security Depository Limited – NSDL), which would in
NSE                                       STAN    turn issue depository receipts to investors in India. The actual
Shareholding Pattern                              shares underlying the IDRs would be held by an Overseas
Foreign Holding                            85.7   Custodian, which shall authorise the Indian Depository to issue
Instituitons                              12.42   the IDRs. The IDRs would have following features:
Corpoarte holding                          1.89
                                                  ~ IDRs would not be redeemable into underlying equity shares
                                                  before one year from date of issue.
                                                  ~ Such company should also have earned profits in the last 5
                                                  years and should have declared dividend of at least 10% each
                                                  year during this period.
                                                  ~ The pre-issue debt equity ratio of such company should not
                                                  be more than 2:1.
                                                  ~ In addition to other avenues, IDR is an additional investment
                                                  opportunity for Indian investors for overseas investment.

Relative Valuation                                Standard Chartered PLC IDR

Name                           Mkt Cap   P/B      Standard Chartered plc is an international banking group
                                                  operating principally in Asia, Africa and Middle East. The
Average (Industry)             37495.8   1.32     company offers its products and services in the personal,
STANDARD CHARTERED PLC         39203.5   1.62     consumer, corporate, institutional and treasury areas.
CITIGROUP INC                  77586.8   0.73
                                                  The bank came up through IDR route to raise money in India.
BANK OF AMERICA CORP           69300.4   0.52
ROYAL BANK OF SCOTLAND GROUP   41996.2   0.56
                                                  This is the only IDR listed in India. The parent company
DEUTSCHE BANK AG-REGISTERED    34212.4   0.76     Standard Chartered Bank after the 2008 fall is the only
BARCLAYS PLC                   30759.8   0.60     company that has survived well and crossed its earlier high. It
Source: Bloomberg                                 has been able to maintain its asset quality and sustain in this
                                                  volatile environment after that also. Consumer banking has
                                                  shown some good growth and cost control where as wholesale
                                                  banking has shown some soft performance. The key drivers
                                                  have been improvement in the segments of wealth
                                                  management, SME, credit card dept and personal loans.




For Private Circulation Only                                                     Anand Rathi Retail Research
                                                                                                                                                                                   Value Pick
                                                                                                                                                                                       8 July 2011

                                                                                                                                                             Time Horizon – 12 Months



                                                                                                    Though in short term the bank is facing hurdles in revenue
                                                                                                    growth but over all, the outlook for the company is good.

                                                                                                    And this positive outlook in performance going forward also
                                                                                                    should be reflected in the share price or IDR in our markets as
                                                                                                    well.

                                                                                                    Valuations

                                                                                                    After the SEBI announcement – the stock saw selling pressure
                                                                                                    and sharp correction was seen. Now currently at this level the
                                                                                                    stock looks attractive with good fundamentals and
                                                                                                    performance background and global peer group comparison
                                                                                                    we have a positive outlook for the stock for a price target of
                                                                                                    Rs. 120.

                                                                                                    Concerns

                                                                                                    Regulatory hurdle - SEBI announcing that IDR holders cannot
                                                                                                    convert the instrument into primary equity shares of the foreign
                                                                                                    company after a year, unless the IDR is illiquid. Clarification on
                                                                                                    the same is required.


Peer Group Comparison
Name                                                             Mkt Cap             P/E             ROE           Dvd Yld             P/B            NIM LF         NPA/Total Loans                ROA LF

Average (Industry)                                               37495.8            12.88           9.58              2.97             1.32             2.10                    2.74                   0.68
STANDARD CHARTERED PLC                                           39203.5            13.23           13.22             2.91             1.62             2.27                    1.91                   0.91

CITIGROUP INC                                                    77586.8            13.75            5.69             0.09             0.73             2.93                    2.42                    0.46
BANK OF AMERICA CORP                                             69300.4             9.94            -2.20            0.37             0.52             2.91                    3.39                   -0.20
ROYAL BANK OF SCOTLAND GROUP                                     41996.2                             -1.31            0.00             0.56             1.39                    6.73                   -0.06
DEUTSCHE BANK AG-REGISTERED                                      34212.4            14.02             5.86            1.83             0.76             1.05                    1.76                    0.15
BARCLAYS PLC                                                     30759.8            8.26             7.26             2.42             0.60             1.53                    5.70                    0.25
Source: Bloomberg

  DISCLAIMER: This report has been issued by Anand Rathi Share & Stock Brokers Limited (ARSSBL), which is regulated by SEBI. The information herein was obtained from various sources; we do
  not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities, options, future or
  other derivatives related to such securities (“related investment”). ARSSBL and its affiliated may trade for their own accounts as market maker/ jobber and /or arbitrageur in any securities of this
  issuer(s) or in related investments, and may be on the opposite side of public orders. ARSSBL, its affiliates, directors, officers, and employees may have a long or short position in any securities of this
  issuer(s) or in related investment banking or other business from, any entity mentioned in this report. This research report is prepared for private circulation. It does not have regard to the specific
  investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial situation and the particular needs of any specific
  investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should
  note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency
  rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report.




For Private Circulation Only                                                                                                                               Anand Rathi Retail Research

				
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