This does look like it is trading cheaply at 0.9 * Book value but some of the key monitorables and triggers to track could be:
Growth guidance – They missed the guidance of Rs 14,000-crore loan book by FY24. Management expects AUM to reach Rs 20,000 crore by FY27. So they need atleast a CAGR of 14-15% over the next three years.
Expansion – New branch addition in Tier 2 and 3 towns of Tamil Nadu as planned and also expand its presence in non-core states.
NIMS – NIMs improved to 5.2 percent in FY24 despite the higher cost of funds. Maintain this pricing power
NPAs – Asset quality must continue to improve (especially non-salaried segment). On the right track since FY22 but needs to keep it that way.
Credit Cost – Keep the incremental credit cost low in FY25 to boost earnings
ROA – Maintain atleast its current ROA of 3%
Policy impact – Govt’s rural focus, potential higher allocation under the PMAY-Gramin scheme (Pradhan Mantri Aawas Yojna) and impending rate cuts – will all be positive triggers
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