First, thank you very much for the feedback!

Great suggestion! I have always been confused about allocation, particularly in terms of balancing my portfolio. I am learning everyday and trying to develop a clarity on allocation. I have been following my feelings, which is far from ideal. What is your suggested method for reducing allocation? Do I sell my positions to reduce allocation? I always thought that I would rather exit the stock completely if my thesis is invalid – for example, if there is a risk of losing money beyond what I can absorb or if the result of the uncertainty turns out to be unfavorable.

As you have correctly noted, my largest allocation is in a negative basket. The money comes from the sale of SBCL and MAPMYINDIA in September 2023 and therefore, it looks skewed. There will be another skewed allocation after I sell the railway sector stocks. I put in fresh cash every month to the value basket which slowly evens out the allocation over time.

Bank’s NII has grown at 30% YoY, PPOP has grown at 24%.

Deposits have grown at 37.2%.

I don’t find any other major bank which has given such an operational performance in this quarter. The only issue with this result is high provisions (which mgmt has explained as Aging related matric) and high Cost to Income ratio (not a new issue).

While the bank has changed quiet a lot, many shareholders want mgmt to show improvement every quarter. I don’t think that works in any company. Bank has already moved from sub 5% RoE to 10%+ RoE. The management has now guided for 17-18% RoE in next 5 years. As a shareholder, this is already very aggressive guidance.

If they even achieve 15% RoE while doubling the Asset book, we are talking about a bank with Book value of 60K+ crores in next 4-5 years. Currently, the bank itself is worth 62K crores. If bank even gets a PB ratio of 2.5 by 2029 (how much will you give to a bank growing at 20% with 15% RoE), we are talking about 2.5x return in 5 years. It means 20%+ returns over next 5 years.

I am surprised that even though bank has shown no operational issues, still people are writing obituaries for the bank as if management is found to be involved in some fraud.

A weak quarter only leads to weak hands giving stocks to strong hands. In investing, only strong hands make profit. If the share falls 5-10% in next few weeks, I would suggest that it’s the best time to add.

I will start posting good results of my tracking companies who has given guidance to see if they are doing walk the talk or not.

Gensol engineering – Q3 Fy 24 revenue was 227 cr and 9 month revenue is 584 cr. FY 23 revenue was 366 cr. I am expecting company to do 250-300 cr in Q4. So Gensol may end up doing revenue of 800-900 cr revenue. Company has guided 900-1000 cr in FY 24 and 1500+ cr in FY 25. Please note that their guidance before Dec was 1300 cr for FY 24 and 2500 cr for FY 25. They reduced the guidance since EV plant hasn’t started. So there will not be any EV contribution to revenue in FY 24.

TTM PE is 60 now which should be changed to 45-50 once Q4 result come. To me results are good. Risk is to watch out for EV roll out and its success since it has been delayed by an year.

Karur Vysya Bank –

Q3 concall highlights –

Advances up 17 pc @ 72.6k cr

Deposits up 13 pc @ 85.6k cr

CASA up 5 pc @ 27k cr

NIMs @ 4.2 pc, up 9 bps YoY

GNPAs – 1.58 pc ( down 112 bps !!! )

NNPAs – 0.42 pc ( down 48 bps !!! )

PCR – 95 pc, up 394 bps !!!

RoA @ 1.65 vs 1.32 pc

RoE @ 17.2 vs 14.1 pc

NII – 1001 vs 890 cr, up 13 pc

Other income – 358 vs 317 cr, up 13 pc

Op Profit – 676 vs 690 cr ( down 2 pc )

Provisions – 149 vs 364 cr ( down sharply )

Net Profit @ 412 vs 290 cr ( up 42 pc !!! )

Segment wise growth in advances –

Retail up 21 pc @ 17k cr

Commercial up 20 pc @ 24k cr

Agri up 19 pc @ 17k cr

Corporate up 6 pc @ 14k cr ( deliberate strategy by the bank to keep low margin business’s growth at moderate levels )

Fresh slippages @ 197 cr ( well within limits )

Bank is holding total provisions of 822 cr against Net NPAs of 305 cr !!!

Total bank branches @ 831 vs 790 LY. To open 8 new branches in Q4

Expecting to maintain NIMs of > 4 pc in Q4 as well

Confident of keeping the slippage ratios under 1 pc

Std restructured book @ 1.09 pc of advances. Holding 28 pc provisions against the std restructured book

Bank has a BNPL arrangement with Amazon. The book is growing well and credit costs are low

Demand from MSMEs continues to be very strong. Seeing good demand in Q4 as well. MSME book is now 33 pc of bank’s total book

Bank is going slow wrt loan disbursements to large corporates as the yields there r low and the bank believes that they can get better yields elsewhere

If the textile industry picks up, it should be positive for the bank as TN has a vibrant textile industry. Signing of UK, Switzerland FTA should also be a positive

Banking is going to increase its focus on retail home loans and builder loans over the next 2-3 yrs. This has been identified as a core growth area for the future

Going to expand slowly into the MFI segment as well (by tying up with various partners)

Disc : holding, not SEBI registered, biased

I wanted to ask this in the call but someone already asked. They replied by saying that some accounts needed higher provisions due to ageing. They follow strict rules for NPAs and as per them those accounts falling in higher age had to be provisioned for accordingly.