Bank continues to perform well. Probably the best among the small size banks in terms of numbers. BUT Promoter issue is a big overhang. Hope there is some movement or clarity on that soon.
TMB Ltd - Q3FY25:
Interest Income : 1331.02Cr ( -0.48% QoQ )
Total Income : 1,519.94Cr ( -2.87% QoQ )
PPOP : 407.70Cr ( -12.36% QoQ )
Net Profit : 300.24Cr (-0.97% QoQ)
Advances : 43,649.59Cr ( 2.55% QoQ )
Deposits : 50,392Cr ( 2.12% QoQ )
BVPS : Rs. 550.38
NIM : 4.00%
GNPA : 1.32%
NNPA : 0.41%
Cost to Income : 46.31%
The bank’s growth rate is currently lagging behind its peers, although asset quality remains robust. Q4 is expected to be a strong quarter for the bank. Given the current growth trajectory, I anticipate the bank to close FY25 with Rs. 1190 Cr as net profit, a 11% YoY increase.
4 Likes
The bank seems to be doing well. Revenues have gone up by ~38% and PAT has gone up by ~43% in the last 3 years. Meanwhile gross NPAs have gone down from 1.69% in FYe22 to 1.25% in FYe25 and net NPAs have gone down from 0.95% in FYe22 to 0.36% in FYe25. Yet valuations are at an all-time low in terms of Price-to-Book and close to all-time lows in terms of Price-to-Earnings as well. What am I missing (other than legacy issues pertaining to ownership disputes/issues and poor compliance by prior management)?
Disclosure: invested a tracking amount, thinking of adding more and making it a significant part of portfolio.
3 Likes
Only issue is the ownership related and the growth is subpar comparitively. Price may jump close to BV at somepoint in time but unlikely to get BV multiples without ownership resolved. Its drep value surely (somwhat similar to Ktk Bank, South india Bank)
1 Like
The Book Value per Share CAGR for Tamilnad Mercantile Bank from June 2021 to June 2025 is approximately 15.58%. Its book value increased from ₹330 to ₹589. However, the stock price is still trading at around ₹430. The current management is confident that their transformation strategies will take effect from Q3, leading to an increased growth rate from the third quarter of 2025. Let’s wait and see.
Disc: Invested 5% of my portfolio in TMB so biased.
5 Likes
A few key takeaways from the Q2FY26 results and today’s ConCall:
- Management remains confident of achieving around 12% growth on both the liability and asset sides. In fact, they expect deposit growth to outpace asset growth.
- The bank is looking to expand its branch network beyond Tamil Nadu in the long term, with a goal of having at least 30–40% of branches outside the state.
- Asset quality guidance: The target is to maintain GNPA below 1–1.5%.
- Restructuring of term deposit rates is underway, and the cost of funds is expected to decline. This effect will be fully reflected over the next couple of quarters.
- The bank will continue to invest in IT upgradations — so far, around ₹150–200 crore has been allocated/spent towards this.
- Book value per share has increased to ₹596.38.
- Current GNPA: 1.01%, NNPA: 0.26% — a very strong set of asset quality numbers.
Mr. Salee, the CEO, sounded quite confident about the bank’s outlook for the next 3–5 years starting FY27. He’s expecting growth in the range of 17–24%, and even mentioned that these are on the conservative side. Let’s see if the management sticks to what they’ve promised this time. Fingers crossed!
8 Likes
17-24% growth is not at all a conservative guidance for banking. Whats going to change so drastically within next 6 months ?
disclosure : One of my top 5 holdings
That’s a fair point. But given the bank’s relatively smaller asset base compared to its peers, growing at high-teens to mid-twenties shouldn’t be too difficult. If they can execute their loan disbursement plans well, while keeping long-term growth and asset quality in mind, that kind of growth looks achievable. Peers with a similar or even larger asset base, like CSB Bank and CUB, are already growing their loan books at around 17–25%.
To answer the question, “What’s going to change so drastically in the next six months?” — we’ll probably have to wait and watch. After being a conservative lender for more than a couple of decades, it remains to be seen what TMB Ltd will do differently to turn itself into a growth engine, while still keeping a tight grip on asset quality. Fingers crossed.
No guidance of 17-24% is given.
Management is saying 12% growth guidance.
If management gave 17-24% guidance please provide source.
Thanks for the source, i was saying for the loan book growth. This 17% to 23% growth in profits won’t be sustainable beyond 1 year as their loan book growth guidance is just 12% to 13% and then hopefully 13% to 15% if the plan of accelerating loan growth through new LOS and LMS and changes in organisational structure occur.
Also it has overhang of corporate governance issues and regulatory overhang. Said that having a book value of 600 plus is an advantage TMB has.
What is drep? Can you explain when to use that?
I think he meant “deep” and not drep was a typo.
2 Likes