SIB INV PPT Jan 23.pdf (3.0 MB)
for the above post
Similar thing happened in CARE Ratings when Ajay Mahajan left.
Unexpected … Head of institution leaving in a midway of turnaround …
Invested …
His tenure was up in September 2023, he came out of retirement. He isn’t leaving midway.
This was a known anti thesis
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Likes of puri will stay long time .i thought to have similar role. My expectations may be different .
This goes for a toss coming this september. Now the good thing is that he is still aroud for next two quarters and the practises/culture initiated by him might stay for some time as the bank board would have learnt how his approach worked. Just hoping that they will take his inputs for a new one, someone of the same pedigree and approach will make sense as integration will be aligned with the current objectives. I know couple of ifs but industry tailwinds still continue.
disc: Might exit if the new MD is not of my liking
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It was already 10% down in pre opening and 16% down in opening, no point selling today in my opinion, he is around for 2 more quarters and also results expected are good. Bank is still cheap and technically also at 200 dma bands. so i am holding on for some sort of panic to settle in. Let’s see what happens.
Attaching screenshots of the stock taking support of 200 dema in daily and weekly supertrend
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He has brought in a big team who are heading various functions. They will stay. Investment in technology is already done.
Quite possible that new leader is one of his team member only as was in case of ICICI, HDFC bank…
In the end it’s cheapest bank available in market and with banking sector doing well iits an absolute sitter to be grabbed via acquisition by a large bank.
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Right… Few board members are from ICICI… Culture ,bank way of business changed lot. Wheather the same team will remain , new head will meet investor’s expectations is a key.Still its trading below the book value…
Disc: Invested
MRK seemed to be doing a great job leading the bank by prioritizing asset quality. Based on his public appearances, it was clear that he had a passion for his work. While it’s reasonable to assume that there might have been a conflict between him and the board, thought that a board composed of individuals such as VJ Kurien and R A Sankara Narayanan would have resolved any issues, should they have arisen !
Almost everyone who is tracking the bank knows about its reckless lending behavior in the past and the aftermath of poor asset quality. MRK was successful in improving the asset quality. This is a great loss to the bank. If you have noticed, the majority of the board members come from a particular community in a specific region, and the common thread among them is ego. God save SIB !!
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What you are saying maybe true but MRK has clearly denied the same : Exclusive| ‘No differences with the board’, clarifies South Indian Bank MD Murali Ramakrishnan on decision to not seek re-appointment
I don’t want to speculate about ego issues without any particular reason. He had anyway come out of retirement when he was appointed so it is what it is
There are absolutely no ego issues…
There are strictly personal reasons (health -family) for which he has to relocate to Mumbai.
Disc: invested
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Given the mentioned reason, it would have been appropriate to allow him to work from Mumbai ?
That he would be doing anyway currently also…may be he needs more personal time…
Let’s leave at that.
New agency is already hired and there will be a overlap for smooth transition…let’s see…
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Does anyone know:
- Whats their plan on raising additional equity capital ? There is a special resolution in F22 AR to raise equity upto Rs 2000 cr
(Current networth: Rs 5854 cr, Paid up capital 209cr) - Debt to Equity is extremely high at 15.8… They say the capital adequacy ratio at 16%. Looks ok?
- Has the mgmt. guided anywhere on their future “Cost to Income ratio” ?
Presently its very high at 74.3%… Why is it so high and what are they doing to reduce it?
(I understand that Credit cost is expected to stay at 1%) - They came up with Vision 2025 under the present MD who doesnt want to continue after Sep 2023. How likely is it new MD will continue with this path?
- What’s preventing a foreign bank or any other indian bank from acquiring South indian bank ? (Retail owns 78%, FII 8%, DII 7%)
People following this would hsve realised that it’s already 10% appreciated from those levels
Learning - Don’t react in panic, take an informed decision.
Disc - Invested and might exit without informing. Please take independent decision
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HI @TradingWithMind,
I sold SIB as a tactical call post Q4 results. I believed the market overreacted on the news of Mr. Murali not continuing and hammered an already very cheap stock going through a credit upcycle and positive changes in underwriting after the announcement. So I waited for the Q4 results and the stock to recover before selling.
I am selling for a couple of tactical reasons:
- I see better return opportunities in pockets of the financial space right now
- I would like to see who the Board appoints as Mr. Murali’s replacement. Murali Ramakrishna has set the bank on a very strong path in terms of all metrics. Hopefully Board appoints somebody who will take this story forward equally responsibly.
From Q4 concall POV, good to see them finally opening some branches. Their CASA deposit growth has been abysmal and I think they will might face NIM stagnation/decrease issues in FY24 if they aren’t able to source cheaper liabilities. Good to see them talk about a data analytics change. There’s a lot to like in the bank’s story at the moment.
Disc: May jump back in if I feel Board is making good decisions as mentioned above.
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South Indian Bank has finalised the candidates for the post of MD and CEO of the Bank. The lender will submit the application to the RBI seeking approval for the same.
Any idea on timeline for RBI approval?