Stock Outlook: Dhanlaxmi Bank ltd

by khalid on 12/10/2011 · 1 comment

The less discussed stock, Dhanlaxmi Bank Ltd fell today by more than 20% when AIOBC stopped its operational functions today. The tank has led the bank to arrive at its 52 week low on the Sensex at Rs.54.40 after the announcement.

The mid size bank had to face the consequences of operational halt on the orders of the (AIOBC) All-India Bank Officers Confederation post doubts being raised over the accounts & provisioning of the bank. The apex bank, RBI had alerted the confederation about its findings of manipulated accounts and mismatch in the asset-liability figures. Careful financial analysis also speaks of maintenance of weak capital adequacy ratio and unacceptable levels of borrowings through the call money.

According to Nadaf (AIOBC) the facts are not well stated in the balance sheet of the Dhanlaxmi bank. The profits appear to have been inflated as a part of the management decisions and this makes the survival of the bank going for a toss within the coming 3 years.

According to analysts, apart from the fundamentals, the technical’s also show a no buy signal as all kind of moving averages, 50 day, 100 day as well as 200 day are showing a downside. The new 52 week low is also not a good time to buy and it would be prudent if no buying in the stock are made at the current levels as a reversal trend also seems unlikely in the close future.

‘Bell the Bull’ says that technically, a good buy level should be only when the stock rebounds at a strong Rs. 75-77 levels.

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