Thank you everyone for the great discussion and analysis so far. I would like to add a few more things not mentioned but pardon me if something is repeated.
First, please go through all of VP’s Capital First Ltd thread if you haven’t already, it also has some pretty good analysis and gives insight into how Vaidyanathan does things.
I think the strategy of 7% and high branch density in urban localities is starting to deliver really well. Following are the ratios of CASA/outstanding debit cards (I think outstanding debit cards can be safely assumed to approximate the number of savings accounts, so this can be assumed to be average CASA per account).
- 3/2019 - 7893Cr/1463355 ~ 54000 Rs
- 9/2019 - 12473Cr/1745881~ 71500 Rs
- 9/2020 - 30181Cr/2432013 ~ 124000 Rs
I think this means existing customers are contributing heavily to CASA, seeing a big interest credit in the account every quarter is encouraging them to add more. Moreover, the average outstanding debit cards increase per month last year was ~45000, this year it is on track to be >60000. In September it was 99657, highest ever jump in a month. I would not be surprised if we see CASA increase by more than 10000Cr in Q3, but since the quarter is loaded with festivals it could be lower as people spend more.
Also, I have noticed in the bank’s engineering job openings that they are looking for someone with experience in Golang. IMO this is a really good sign of embracing modern tech, the language is relatively new and was designed to build highly scalable systems. The team is also consulting with people like this https://www.linkedin.com/in/laurencedejong/ to design their backends.
The bank is definitely making all the right moves, just hope they don’t chase growth at the cost of borrower quality. I personally feel the growth will be steady because people become more conservative as they age. I was overly optimistic until I went through all of CapF thread yesterday, still optimistic but doesn’t hurt to be cautious at this stage. This is my largest position but avg price is below PB 1 so I’m comfortable maintaining it at this point.
Not a recommendation. You can check the outstanding card details here https://www.rbi.org.in/Scripts/ATMView.aspx