Citigroup Inc , the largest U.S. bank, may need to write down $12 billion of debt and boost reserves for bad loans by $1 billion as the global credit crunch deepens, a Sanford C. Bernstein & Co analyst said.
Citi seems to shed billions and billions of dollars in mortgage related instruments. In India Citi seems to compensate all these losses by buying stocks that are keeping on rising despite PE multiples in Triple Digits.
India Bulls Real Estate Rs.767 PE Multiple of 1347.
Hindustan Oil Exploration Rs.154 PE Multiple of 810
Zicom Rs.247 PE Multiple around 40
Karuturi Networks Rs.393 PE multiple around 89
These are few examples. We’d like to see how the prices of Zicom are going to climb after series of bulk deals done by Citi. I accept there might be some turnaround stories or hidden stories. But these PE multiples are really awkward.
We also would like to see the prices of scrips after purchase of Reliance Capital. At this point of time, we don’t want to comment on these purchases. Lets’ make comment after 6 months. We would compare the previous balance sheet and we could find whether the price justifies the market price of particular scrip. Till then, Wait and Watch!!!!
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