Very good run-up in stock after the result from Rs. 28 to Rs. 33. So, obviously results are taken up very well by the market. Below is my comment on Q3FY24 results:
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To repeat, Since the corporate book is a shorter term with very high ratings, NIMs will continue to remain under stress until MSME loans are not grown. The share of Corporate Loan in the mix increased Q-o-Q and MSME reduced. So, a thing to watch out for.
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Employee expenses have been a bigger issue in the last few quarters due to which C/I Ratio is increasing. Despite a marginal reduction in employees and adjustment of 24cr. one-time additional expenses in Q3FY24, the cost has grown. So, again need to see how this will be managed.
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However, slippage numbers are well as guided. Also, GNPA, NNPA, PCR, etc. numbers along with ROA (>1% now) and ROE (>15% now) are very encouraging signs and as guided by management.
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But we need to be again careful that this ROA/ROE are outcome of very healthy recoveries. We need to analyze ROA/ROE given that recoveries slow down going forward.
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The major focus area is laid down to grow MSME loans and rationalize costs by management in Q3FY24 with no clear guidance as of now. However, he mentioned that we will continue to function the way the previous MD has laid and make some slight changes as we go ahead.
Conclusion:
I will keep tracking this stock till the time I get more hang on the new MD at SIB. Also, actively looking to see how MSME will grow with good underwriting standards. Currently, looking at numbers would not be in a hurry to buy as I have already taken an exit post Q2FY24 results.
No-Position Currently
Regards,
Mukul Jain
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