TAMILNAD MERCANTILE BANK LIMITED

Recommendation history

• 2025-03-30HoldHold: FY25 was strong with INR1,183 crore net profit (+10.35%), 1.25% GNPA, 0.36% NNPA and 32.71% CRAR, but FY26 profit growth is guided at only 10%-12% as NIM moderates to 3.80%-3.90% and capex rises. The balance sheet is well provisioned and capitalized, yet the investment case still depends on unproven CASA recovery, digital execution and acceleration in FY27.
• 2024-03-30HoldHold: FY24 profit reached Rs.1,072 crore, Q4 NIM improved to 4.24%, GNPA fell to 1.44%, and CRAR was 29.37%, but full-year NIM declined to 4.11% and growth was only about 11% in RAM. The 15% FY25 growth aspiration is not yet board-approved, while a lumpy Rs.165 crore corporate NPA, limited disclosure on the other book, and an unresolved MD and CEO search keep the risk-reward from being a clean buy.
• Q4 2023HoldHold: FY23 net profit rose 25% to ₹1,029 crore, with 4.46% NIM, 1.39% gross NPA, 0.62% net NPA and 16.78% ROE. The balance sheet is unusually clean and well-capitalized at 26.26% CRAR, but the investment case depends on executing a costly digital and branch expansion while defending an MSME-heavy franchise against larger banks.
• —HoldHold: Q2 shows credible operating improvement—deposits grew 12.32%, CASA 9.30%, GNPA fell to 1.01%, ROA reached 1.85%, and cost-to-income was 43.81%—but the investment case still depends on unproven execution. Management targets 14%-15% FY26 credit growth and 12%-13% deposit growth, while technology spending, a sub-INR2,000 crore technical-write-off pool, and a still-unfinished MSME build-out temper the upside.
• —HoldHold: Q2 net profit reached a record INR303 crore, NIM expanded to 4.25%, and gross NPA fell to 1.37%, but deposits are guided to only 7.5%-8% growth versus 13% advances growth. The investment case depends on unproven MSME, digital, branch and NRI execution while management expects NIM to contract and cost-to-income to rise toward 45%.
• —HoldHold: Q3 net profit rose 5.6% to INR 300.24 crore, advances grew 13.7%, and gross/net NPA improved to 1.32%/0.41%, but the 86% CD ratio and flat CASA expose funding pressure. Management expects NIM to fall from 4% to 3.75%-3.80% and ROA from 1.89% to about 1.75% while technology investment may lift cost-to-income toward 50%, so the improving asset quality is not yet enough for a clean buy.
• —HoldHold: Q1 deposits grew 9.38%, advances 10.44%, and net profit 6.13%, while GNPA improved to 1.22% and capital adequacy stood above 32%. The bull case is exceptionally strong provisioning and secured lending; the tension is that NIM fell to 3.84% and the targeted 15% advances growth depends on an unproven MSME technology and execution ramp.