MAHABANK - Bank of maharashtra Share Price

Management expressed strong confidence in Bank of Maharashtra's performance, highlighting a successful financial year marked by consistent growth across various metrics. The total business grew by 15.30% year-on-year, reaching INR 5,47,000 crore, while total deposits increased by 13.44% to INR 3,07,000 crore. Advances surged by 17.76% to INR 2,40,000 crore, with Non-Performing Assets (NPA) declining to 1.74% and Net NPA to 0.18%. The Provision Coverage Ratio (PCR) was maintained at 98.3%. Operating profit rose 14% to INR 2,520 crore for the quarter, resulting in a 16% year-on-year increase for the full year. Net profit for FY2025 jumped 36% to INR 5,520 crore.

Management noted a year-on-year Net Interest Margin (NIM) improvement of 8 basis points, with a full-year figure of 4% and a quarter-on-quarter increase to 4.01% for Q4. Return on Assets (ROA) was reported at 1.75%, a 25 basis point increase from the previous year. The Capital Adequacy Ratio (CRAR) stood at 20.53%, and the CET1 capital adequacy was about 16%.

Looking ahead, management plans to open 1,000 branches over the next five years, with a target of 200 to 220 branches in the next 12 months. They also secured a license to open an International Banking Unit (IBU) at GIFT City, enhancing their global presence. The bank's guidance for FY2026 includes advances growth of about 17%, deposit growth at 14%, and maintaining a Cost-to-Income ratio below 40%. Management expects ROA to remain at 1.75% and GNPA below 2%. The conservative NIM guidance for FY2026 is approximately 3.75%.

Questions and Answers from Earnings Conference Call

1. Question: "Is this growth 100% delivered by branches, or do you have some tie-up with the DSA or loan originator?"

Answer: Most of the new business is sourced from our existing branches. While we previously had year-on-year growth from NBFC relationships and pool buyouts, FY '25 saw a de-growth in pool buyouts by 7%. However, our advances grew almost 18%, demonstrating our branch-focused strategy. We have stringent underwriting standards, ensuring asset quality remains paramount; thus, we avoid aggressive DSAs. Our branches are equipped to source new business, and this has resulted in robust growth without compromising quality.

2. Question: "What is the outstanding of this pool buyout?"

Answer: As of March 31, the pool buyout outstanding is INR 12,998 crore, compared to INR 14,045 crore on March 31, 2024. This decline aligns with our strategy to focus on core branch lending, which has resulted in substantial loan growth despite reduced reliance on pool buyouts.

3. Question: "What would be the share of loans linked to EBLR, MCLR, fixed rate, and other benchmarks?"

Answer: The current loan portfolio comprises approximately 37% linked to EBLR and about 57% linked to MCLR. We have been adjusting our MCLR rates proactively, and despite external economic factors, our NIM improved from 3.97% to 4.01% in Q4. We are maintaining a strategic focus on both the quality and pricing of our assets to ensure sustainable growth.

4. Question: "Is the growth in the last quarter sustainable?"

Answer: Our growth pattern is consistent with industry norms; Q4 typically sees the highest performance due to various macro events, including state elections. While the last quarter saw significant contributions, our focus on core business remains steady. The average advances and deposits show consistent growth rates of 18% and 14%, respectively, supporting the sustainability of our growth trend.

5. Question: "Can you clarify the restructuring of standard advances that went up by INR 439 crore?"

Answer: The increase in restructuring pertains to just two accounts undergoing DCCO extensions due to land issues, specifically in infrastructure projects with a PSU and a state government. This situation isn't alarming and reflects our proactive management of standard advances.

6. Question: "What are the plans regarding the capital raise of INR 7,500 crore for QIP and INR 10,000 crore for long-term bonds?"

Answer: We plan to assess our capital requirements in line with our financial strategy. Shareholder and regulatory approvals are necessary before proceeding with the capital raise. With our government holding at 79.6%, we have leeway under SEBI regulations, providing us with flexibility in timing and method for the capital raise throughout the financial year.

7. Question: "What type of companies do you have exposure to in the infrastructure sector?"

Answer: Our infrastructure exposure is strategically allocated towards sectors like renewable energy and the road HAM model. Adhering to our guidance of maintaining a RAM corporate share of 60-40, we have successfully achieved a ratio of 62-38, ensuring our investments are not only top-line contributors but also enhance our overall profitability.

8. Question: "With falling interest rates, what guidance do you provide on NIMs and future growth?"

Answer: We conservatively guide NIMs for the upcoming year at around 3.75%. This projection considers potential rate cuts and existing loan structures. Despite previous successes, we will continue to prioritize long-term asset quality and maintain our overall strategies to balance growth and profitability amidst a changing rate environment.

9. Question: "What guidance can you provide on advances and deposit growth for the next year?"

Answer: Our advance growth guidance stands at approximately 17%, while deposits are expected to grow around 14%. We aim to maintain CASA above 50%, demonstrating our commitment to optimizing low-cost deposits alongside our broader growth strategies for sustainable financial performance.

10. Question: "How do you view the current economic demand and future growth potential?"

Answer: India's economic indicators are promising, with GST collections showing growth. Although external factors may disrupt certain sectors, we believe that overall demand remains robust. Our proactive strategies position us to navigate these challenges while continuing to seek high-quality growth opportunities in emerging sectors.