I am invested, and I believe there is reasonable margin of safety at this level. It’s a well run bank, but traditionally conservative. There is geographic concentration risk given 50-60% (if not more) of their branches are in TN. They are trying to cautiously increase retail lending besides the technology improvements for faster MSME loan approvals. They are also slowly adding branches in a few other states. We have to see how well they execute across these areas. MSMEs/traders (who are their main customers) are still not borrowing much, but I think we are past the worst there and it should improve. If lucky, it can improve fast, but even otherwise, we should see steady growth. From a broader macro perspective, given the high level of personal loans in the system, I am currently more comfortable with conservative lenders like CUB who do not have such exposure and with the larger private banks.
| Subscribe To Our Free Newsletter |
