Good Article but Nothing New and most Investors atleast in valupickr knew the biggie exposures to ADAG, DHFL, ESSEL Group.
The way I read it, this article assumes that all the 41K CR will turn into NPA which is not really true and chances of that happening is less than 1% if you ask me. Coming to individual large exposures:
->ADAG loans are current and it has enough collateral to cover in case of default, Delhi Power Distribution is the cash cow and chances of recovery is more than 80%.
->DHFL Bonds->MTM Adjustments done in last QTR(Q1) and same might continue this qtr as well if the bonds are downgraded but atleast 50% might come back in max 1 Year-Hope.
->ESSEL Group ->The stake sale in ZEE should cover for this exposure and chances of recovery here is >75%
->CG Power is recent one and Unknown that came up few weeks ago, Not sure of the strategy here for recovery. Let’s keep a tab on this for now, I believe they have Equity as Collateral.
Regarding the Others of 4830 CR, even with chances of 30% recovery in long run they will get atleast 1000-CR.
The author has called out an Unreported NPA’s of 11500-CR which is really worrisome. Let’s wait for Q2 results to see how much of this will come out. How long will bank take to get out of NPA mess is definitely a question and it could be anywhere between 3 to 5 qtr’s to see reasonable improvement in PCR(Provision Coverage Ratio) which is currently at 43.1.
If the growth Capital of 1B+ comes in and new engines(retail…) starts firing in next few quarters along with economy turnaround from slump, I don’t see a merger being evident especially with PSU’s. However a big fish or tech company might throw hat in the ring to pick up majority stake as the bank is really ahead in technology compared to other peers of similar size or less.
From retail Investor’s stand point, It’s high time that Bank comes out with more disclosures compared to what is being done now. Now,the stock is completely under operator control and news driven, if this continues Yes might be out of F&O first and save itself from operator control.
Disclaimer: Invested and Views could be Biased.