The post begins with this news...
Actually before that
The stock PNB Gilts, a underwriter and trader of G Secs.
I have been a long term investor in this stock since 2020. Excellent dividend yield and good Price to Book ratio, a value buy.
Only negative the occassional cyclical loss that the company posts due to (m to m) mark to market loss for its holdings when the interest rates rise and the price of its G Sec holdings fall.
It's Sept 2023 now. Price Rs 76
What should be done.
1. Interest rates most probably at peak...may fall from here. Least chances of M to M loss now for few years till the next cycle.
2. Still a value buy with good dividend yield and low Price to book ratio.
And the most important reason
3. Value migration in G sec market.
A proposition similar to 1980s Manmohan Singh Ji's equity market liberation when FIIs were allowed for the first time to invest in equity market.
Now foreigners will be able to invest rather /have to cumpulsorily invest in GSecs ( which is a larger than equity market by value) to benchmark there emerging markets debt funds to global indices.
A big boost to the volumes and issuances of G secs.
J P Morgan is the first....will include Indian G Secs from June 2024.
By that time/ before that time FTSE, Bloomberg and other agencies are likely to include G secs in there indices.
And prempting the move smart global funds may begin investment even before the index inclusion to generate better alpha.
PNB Gilts is the only listed broker of the G Sec market in India.
What does it's future hold.
My assumption the stock will rally/ multiply till June '24 and subsequently give yearly compounding gains irrespective of the market conditions:
Reasons
1. Good dividend declaration.
2. Positive profitable quarters hence forth till the next intrest rate upcycle
3. New news of new index inclusion
4. Only listed G Sec player
5. Low floating stock and low market cap.
6. Under valued even without news flows.
A once in a lifetime opportunity??
Any Targets?
After thought:
1. Dated 26 September 2023
Liberalisation moment
2. Dated 28 sept 2023
ICICI sees $10 billion inflow even before index inclusion
3. Dated 6 Oct 2023.
PNB Gilts plans to enter forex market/ trading
4. Dated 22 Oct 2023
RBI opens dated securities to help Russia park its rupee surplus
https://www.thehindubusinessline.com/economy/countries-accumulating-surplus-in-inr-to-be-able-to-invest-in-g-secs-through-rupee-accounts/article67448748.ece
5. Dated 26 oct 2023
6. CEOS COMMENTS ON FUTURE OUTLOOK
7. Post Bloomberg announcement
11/01/24
8 FpI ownership surge
19/01/2024
9. 05 March 24
Bloomberg to add India to EM bond indices from January 31, 2025
10. 27 March 2023
11. LlCs bond FRA entry. 12 Aug 2024
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