Bank of Maharashtra, a mid-sized public sector bank, has been in the news lately due to its improving financial performance and attractive valuation. In this article, we will analyze the bank’s financials, ratios, and future outlook to determine if it’s a good buy or a bad choice.
Bank of Maharashtra – Financial Performance:
Bank of Maharashtra has shown significant improvement in its financial performance over the last few years. The bank’s net profit has grown at a CAGR of 15% over the last three years, driven by a decline in provisioning costs and an improvement in net interest margins.
The bank’s asset quality has also shown improvement, with the gross non-performing assets (NPAs) ratio declining from 10.6% in FY2020 to 6.3% in FY2023. The net NPA ratio has also declined from 4.5% to 2.3% during the same period.
Ratios:
- Gross NPA Ratio: 6.3% (FY2023)
- Net NPA Ratio: 2.3% (FY2023)
- Provisioning Coverage Ratio: 75.3% (FY2023)
- Capital Adequacy Ratio: 13.3% (FY2023)
- Net Interest Margin: 3.2% (FY2023)
Future Outlook:
Bank of Maharashtra’s future outlook appears promising, driven by its improving asset quality, increasing CASA deposits, and growing retail loan book. The bank’s management has set a target to increase its retail loan book to 40% of its total advances by FY2025, up from 30% currently.
The bank’s CASA deposits have also shown significant growth, increasing by 25% YoY in FY2023. This has helped the bank to reduce its dependence on wholesale deposits and improve its liquidity position.
Vijay Kedia’s View:
Vijay Kedia, a well-known value investor, has expressed his liking for Bank of Maharashtra on several occasions. Kedia has stated that he likes the bank for its long-term perspective, given its improving asset quality, growing retail loan book, and attractive valuation.
Conclusion:
Bank of Maharashtra appears to be a good buy at current levels, given its improving financial performance, attractive valuation, and promising future outlook. The bank’s asset quality has shown significant improvement, and its retail loan book is growing at a healthy pace.
While there are risks associated with investing in any bank, Bank of Maharashtra’s strong provisioning coverage ratio and improving liquidity position make it an attractive bet for long-term investors.
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