Is ADBL’s Dividend Streak Hiding a Valuation Problem?

Introduction and Current Price

In this deep-dive, we examine Agricultural Development Bank Limited (ADBL). The stock is currently trading at 317.70 NPR, showing a minor change of -0.03 percent. Operating within the Commercial Banks sector, ADBL remains one of the prominent entities watched closely by market participants.

Valuation Metrics

Let us look at the fundamental metrics provided for the bank:
- EPS (Earnings Per Share): 13.33 NPR, showing how much profit the company generates per share.
- P/E (Price-to-Earnings Ratio): 23.48, indicating what investors are willing to pay for each rupee of earnings.
- P/B (Price-to-Book Ratio): 1.34, comparing the current market price to its book value.
- ROE (Return on Equity): 10.35 percent, measuring profitability relative to shareholders' equity.
- Book Value: 233.99 NPR, representing the net asset value per share.
- Graham Number: 264.91 NPR, a formula-based estimate of a fair stock value.

Peer Comparison

Among the 19 peer companies in the Commercial Banks sector:
- EPS Rank: 14th out of 19 (sector median is 18.01, best is EBL with 36.95).
- ROE Rank: 11th out of 19 (sector median is 10.42, best is KBL with 15.66).
- P/E Rank: 15th out of 19 (sector median is 18.87, best is PRVU).
- P/B Rank: 8th of 19 (sector median is 1.41, best is NIMB with 0.98).

This comparison shows that while ADBL holds a decent position in terms of P/B ratio, its EPS and P/E rankings lag behind the sector median.

Dividends

Looking at the dividend track record, ADBL announced a total dividend of 13 percent (9.75 percent cash and 3.25 percent bonus) for the fiscal year 2081/2082 with a book close date of 2025-11-30. The bank has a dividend streak of 2 years and has paid dividends in 4 out of the last 5 years. Its 5-year average total dividend stands at 11.52 percent with a current dividend yield of 3.07 percent.

Sector vs. NEPSE

The banking sector sits at 43.65 percent in its 5-year range relative to NEPSE. It maintains a weekly and 12-month correlation of 0.92 with the broader NEPSE index, showing that the sector moves quite closely with the overall market.

Price Trend and Broker Patterns

The moving averages (5-day, 20-day, and 50-day) are all signaling a 'Bullish' trend. The 52-week range spans from a low of 285.2 to a high of 340 NPR. Over the last 20 sessions, big broker patterns indicate a 'Quiet accumulation' pattern with a score of 66, pointing toward steady accumulation by specific market participants.

Risks and What to Watch

The health score of the bank is 65 with an 'OK' grade, supported by its consistent dividend payout in 4 of the last 5 years. However, investors should monitor its valuation levels given its current P/E and EPS standing.

Conclusion

We have reviewed the facts and figures of ADBL strictly based on available data. This review does not constitute a buy or sell call.