Invest in India's Banks To Capture The Nation's Growth

On Thursday I noted, “India’s ICICI Bank (NYSE:IBN) has an IPO in process ($4.9 billion), which has lifted the US trading price as I have suggested here a couple days ago.”

As you know, there is a second Indian bank, HDFC Bank (NYSE:HDB), that is included in the Cara Global Best 100 alongside ICICI Bank. HDFC Bank, which is smaller than ICICI, is planning a $1 billion offering. Today comes news that there will be a public share offering (via global depository receipt) for another Indian bank, UTI Bank Ltd (Yahoo:UTBK.BO), totaling US$600 million, books to open June 26 with pricing June 29.

UTI Bank will eventually become a Cara Emerging Market 100, so if you can buy the IPO, I believe you will do well with it over the years.

Years ago, I once had a private meeting with then Finance Minister of Canada Michael Wilson about my investments/analysis in securities in other countries. When it came to Germany, I mentioned a few names and he offered rhetorically, “Why not Deutsche Bank? When you invest in a country, why not through their large banks, which in effect is like holding a mutual fund since they cover the economy?”

Michael Wilson had been a senior officer and director of Dominion Securities, Canada’s largest component of HB&B, a company I also once worked for, and still have a high regard for. Mr. Wilson is presently Canada’s Ambassador to the US., and one of the smartest people I have met.

I never forgot that piece of advice about investing in a country’s banking system. In terms of India, banks are the place you ought to be directing your capital until securities markets there develop further as in Brazil. Eventually I believe that will happen.

In fact, in the next ten years there will likely be many new IPOs of Indian companies. I would try to buy those companies and then put my profits into a cross-section of Indian banks.

Comments

[dsassyt@aol...:]

Are these IPO's or some mentioned public Indian banks sold through the US market exchanges?

2007 Jun 25 05:02 PM

[sacsharma:]

Also take advantage of India's growing real estate.
sagecapital.wordpress..../

2007 Jul 18 11:58 PM

[sacsharma:]

Check India's top steel stocks-some already moved up 10%.
sagecapital.wordpress..../

2007 Jul 20 09:19 AM

[sacsharma:]

Check India's top banks which are ripe for an uptrend:
sagecapital.wordpress..../

2007 Jun 28 10:55 AM

[R Naylor:]

Comments are right on - no one knows the local market better than the local bank. Particularly applicable to people like me trying to capture a slice of an emerging market without having good, on-site intelligence.

The idea slips terribly however in mature markets. Let's see...what rank (in size & prestige) bank had the largest sub-prime write-off in th US?, Switzerland?, France?, Belgium?, England?,.

When I was fully plugged in to the world markets we used to laugh at the bankers, waiting for the next "herd" mistake. Zairean debt in 1978? Thank W. Wrston (name mispelled to avoid liability suits.)

Anyway, right on. IBN, HDB, CIB?(Columbia) - various Brazilian names - all in their lower quadrants, behind the S&P and being marked up nicely. I did a lot of buying the other day and they were mainly second world banks from Brazil, India, Columbia. I would be buying Santander if I didn't see a property mess in Spain.

Thanks for the comments - great article; concise and spot on.

2008 Apr 09 09:57 PM