T N Merc. Bank Q3 FY26 Earnings Analysis

- Tamilnad Mercantile Bank expects deposit growth of 12% to 13% for the current year, with CASA growing around 12%. - Advances are targeted to grow at 14% to 15%, improving from the current 10.34%. - Total business growth is picking up momentum, with 11.40% achieved recently and 12.32% growth in deposits. - The bank aims to grow credit, especially through non-jewel portfolios like MSME and retail loans, while continuing focus on jewel loans with caution on gold price sensitivity. - The newly implemented initiatives and loan management systems are expected to drive growth, with noticeable impact from Q3 onwards. - Profit growth is expected to be at least 17% in FY '27, propelled by core banking businesses rather than recovery from written-off accounts. - Expansion outside Tamil Nadu planned by increasing non-Tamil Nadu branches from current ~25% to beyond 35% in the next 3 years, supporting broader growth.

- FY 2027 is expected to be a breakout year with profit growth around 20% ± 3% (Page 12). - FY 2026 is expected to deliver 17% profit growth despite ongoing investments in IT and branch expansion (Pages 12, 16). - Growth in advances targeted at 14%-15%; deposits expected to grow 12%-13%, CASA at ~12% by year-end (Page 23). - Earnings per share currently around INR 20+ with a book value of INR 596.38 (Page 5). - Operating profit growth expected to moderate HR costs relative to income, boosting profitability (Page 15). - Profit growth partly driven by core banking activities instead of one-off recoveries, indicating sustainable growth (Page 23). - Management confident growth momentum, evidenced in recent quarters and October trends, will continue (Pages 17, 23).

- Tamilnad Mercantile Bank is investing significantly in IT modernization with an enhanced budget of INR 250 crores for the current financial year. - This INR 250 crore is split evenly: around INR 125 crores for Capex and INR 125 crores for Opex. - Key IT investments include a new loan management system (Phase 1 under UAT, Phases 2 and 3 launching in next two quarters), digital engagement hub (going live January 2026), workflow automation, revamped internet and mobile banking, and customer data platform (CDP) development. - The bank is upgrading legacy manual operations to modern automated systems to improve productivity, sales focus, and customer experience. - Investments in artificial intelligence (AI) for productivity, human capital management (HCM), and customer experience are underway. - These investments are part of a multi-year plan and will continue beyond the current year to fully modernize the bank.

- There is no explicit mention of any current or immediate future fundraising through debt or equity in the provided transcript. - The management discusses ongoing investments, particularly around a substantial IT modernization budget of INR 250 crores for the current year and continued investments anticipated for FY '26 and beyond. - The focus seems to be on internal cash flow and profitability growth (targeting 17% profit growth by FY '27) to support expansion and modernization. - No plans for raising capital via equity or debt markets have been indicated. - Management emphasizes growth in lending and deposits, cost-efficiency, and system upgrades funded through existing resources or operational means rather than external fundraising.

The transcript of the Tamilnad Mercantile Bank Limited earnings call does not provide any specific information regarding the current or expected order book or pending orders. The discussion mainly focuses on financial performance, deposit and loan growth, cost of funds, IT investments, asset quality, and other banking operational matters. There is no mention or disclosure related to order books or pending orders in the provided transcript sections.