As a Primary Dealer, the company's primary activities entail supporting government borrowing program via underwriting of government securities issuances and trade in a gamut of fixed income instruments such as Government securities (g-sec), Treasury Bills, State Development Loans, Corporate Bonds, Interest Rate Swaps and various money market instruments such as Certificates of Deposits, Commercial Papers etc. It has a dedicated trading desk managed by experienced professionals having strong research and market insights.

Having completed 17 years of operation, the company boasts of rich experience and matchless standards in its service to diverse client base in the fixed income market. It has been a pioneer in retailing of Government Securities contributing to a deep and broad-based market.

Quarter results

PNB Gilts registered 22% rise in income from operations to Rs 95.04 crore in the quarter ended March 2015.

Just 10% rise in interest expenses to Rs 67.57 crore saw net income rising 66% to Rs 27.47 crore.

Other income grew 73% to Rs 10 lakh which saw total income growing 66% to Rs 27.57 crore.

Operating expenses increased 43% to Rs 4.82 crore, after which OP jumped 71% to Rs 22.75 crore.

Depreciation went up 273% to Rs 55 lakh after which PBT grew 69% to Rs 22.20 crore.

Even as provision for taxation grew 69% to Rs 7.37 crore PAT grew 69% to Rs 14.83 crore.

FY 2015 results

For FY 2015, PNB Gilts registered 19% rise in income from operations to Rs 409.78 crore.

Just 7% rise in interest expenses to Rs 260.51 crore saw net income rising 45% to Rs 149.27 crore.

Other income fell 56% to Rs 22 lakh which saw total income growing 44% to Rs 149.49 crore.

Operating expenses increased 19% to Rs 14.68 crore, after which OP jumped 48% to Rs 134.81 crore.

Depreciation went up 68% to Rs 93 lakh after which PBT grew 48% to Rs 133.88 crore.

Even as provision for taxation grew 51% to Rs 44.28 crore PAT grew 46% to Rs 89.60 crore.

Other details

As on March 2015, secured loans (including market repo) of Rs 2611.95 crore comprise Rs 932 crore under RBI LAF/term repo facility, Rs 275.16 crore under CBLO, Rs 339 crore under RBI refinance facility, Rs 360 crore under bank over draft and Rs 704.80 crore under repo facility.

Unsecured loans of Rs 1245.96 crore comprise of cal money Rs 670 crore and Rs 575 crore of line of credit from PNB.

Capital Adequacy ratio as on March 2015 stands at 65.07% against RBI stipulation of 15%.

Net owned funds of the company stands at Rs 718.06 crore against the minimum stipulated capital of Rs 250 crore.

RoNW as on March 2015 stood at 12.98%.

The board has recommended final dividend of Rs 1.50 per share.

Outlook

In India, ideal conditions are there for sustained downtrend in interest rates over the next couple of years. This creates good conditions for bullish g-sec and bond market throwing up many trading and investment opportunities in the debt market. PNB Gilts is ideally placed to capitalise on these opportunities. The company proposes to be nimble footed in trading and also look for more stable avenues of revenue to maintain consistency in the returns to the stakeholders. The company shall also endeavor to focus on non- traditional sources of income like fee based services and equity markets.

While banks especially PSU banks with large g-sec holdings will also make good treasury profits in a bullish debt market, their overall profits are subject to burden of NPAs, while in case of PNB Gilts there is no credit risk as it is mainly in to investment and trading in g-secs only.

Valuation

The share price trades 31.