1. At a Glance
A century-old southern warhorse quietly compounding profits at a 14% ROE, trading at 6x earnings, and still cheaper than a roadside chai. TMB may not have swanky fintech branding, but it sure knows how to run a bank (without exploding like Yes Bank).
2. Introduction with Hook
If HDFC is the Ambani of Indian banking, then Tamilnad Mercantile Bank is the unsung Thalaiva — silent, powerful, and shockingly underpriced.
Q1 FY26 PAT? ₹305 Cr.
P/E? Just 6.
ROA? 1.85%.
And guess what? NPA cleaner than your favourite influencer’s conscience — Gross NPA at just 1.22%.
3. Business Model (WTF Do They Even Do?)
- Bread & Butter: MSME, retail loans, and deposits across southern India.
- Branch Network: 688 branches — half in semi-urban & rural areas. Ground-level dominance.
- Digital Push? Slowly warming up. The bank’s UI feels like it was coded on Windows XP — but hey, profits still come in.
Basically, TMB is your old-school family jeweller: reliable, not flashy.
4. Financials Overview
“Growth is slow, but returns are rich. Like South Indian filter coffee — strong and consistent.”
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹4,081 Cr | ₹4,848 Cr | ₹5,291 Cr |
| Net Profit | ₹1,029 Cr | ₹1,072 Cr | ₹1,183 Cr |
| EPS | ₹65.00 | ₹67.70 | ₹74.68 |
| ROE | 17% | 14% | 14% |
| Gross NPA | 1.70% | 1.25% | 1.22% |
TTM EPS: ₹75.79.
Stock CMP: ₹455.
Let that sink in.
5. Valuation
“P/E of 6.01x. You pay more for a multiplex popcorn.”
- P/E: 6x
- P/B: 0.77x
- Dividend Yield: 2.42%
Fair Value Range: ₹600–₹700 (based on 10x–12x earnings).
Below ₹500, this isn’t just value — it’s vintage.
6. What’s Cooking – News, Triggers, Drama
- New MD & CEO: Salee Sukumaran Nair (appointed Aug 2024). Focus on digital + governance.
- Q1 FY26 PAT: ₹305 Cr — up 6.3% YoY. Steady, not flashy.
- ESOP Plan 2024 approved. Someone’s betting on retention.
- Tax Notices — ₹58.9 Cr demand. Not existential, but monitor-worthy.
Otherwise, no drama = boring = great for banks.
7. Balance Sheet
“Built like a fortress. No toxic derivatives, no surprise loans.”
| Item | FY25 |
|---|---|
| Equity Capital | ₹158 Cr |
| Reserves | ₹8,850 Cr |
| Deposits | ₹53,689 Cr |
| Borrowings | ₹500 Cr |
| Total Assets | ₹66,450 Cr |
Debt is minimal. CASA mix healthy. And no overexposure to glam sectors.
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net CF |
|---|---|---|---|---|
| FY23 | ₹-1,270 Cr | ₹-89 Cr | ₹1,088 Cr | ₹-270 Cr |
| FY24 | ₹-611 Cr | ₹-100 Cr | ₹697 Cr | ₹-14 Cr |
| FY25 | ₹1,899 Cr | ₹-99 Cr | ₹-960 Cr | ₹840 Cr |
The bank bounces back with ₹1,899 Cr from operations in FY25 — clean, robust recovery.
9. Ratios – Sexy or Stressy?
“ROE at 14%, NPAs trending down, and a cost-to-income ratio that doesn’t scream disaster.”
| Ratio | Value |
|---|---|
| ROE | 14% |
| ROA | 1.85% |
| Gross NPA | 1.22% |
| Net NPA | 0.33% |
| CAR | ~20% |
Better metrics than some largecaps. Still not a market darling. Classic underdog.
10. P&L Breakdown – Show Me the Money
| FY | Revenue | PAT | NIM | EPS |
|---|---|---|---|---|
| FY23 | ₹4,081 Cr | ₹1,029 Cr | ~3.5% | ₹65 |
| FY24 | ₹4,848 Cr | ₹1,072 Cr | ~3.2% | ₹67.7 |
| FY25 | ₹5,291 Cr | ₹1,183 Cr | ~3.0% | ₹74.7 |
Margins softening slightly but PAT still up. Why? Better operating efficiency + loan mix optimization.
11. Peer Comparison
“Cheapest P/E among peers. Also lowest drama index.”
| Bank | EPS | P/E | ROE | GNPA |
|---|---|---|---|---|
| HDFC Bank | ₹74 | 21.7x | 14.5% | 1.2% |
| ICICI Bank | ₹76 | 19.9x | 17.9% | 2.1% |
| Axis Bank | ₹89 | 12.1x | 16.3% | 1.4% |
| TMB | ₹75.7 | 6.0x | 14.0% | 1.2% |
TMB is the lowest P/E + strong return combo. Market isn’t pricing its safety… yet.
12. Miscellaneous – Shareholding, Promoters
| Category | Jun 2025 |
|---|---|
| FIIs | 4.58% |
| DIIs | 2.40% |
| Public | 93.03% |
No promoters. This is a widely held old-gen bank. FIIs have doubled stake over last year — smart money creeping in.
13. EduInvesting Verdict™
Tamilnad Mercantile Bank is the financial equivalent of an old Tamil movie: slow to open, but delivers solid plot by interval and quietly becomes a cult hit.
With sub-1% Net NPAs, 14% ROE, and earnings compounding without noise, it’s the Chettinad thali of banking stocks — unglamorous, filling, and highly underrated.
“It’s not a multibagger yet. But it sure won’t bankrupt your portfolio.”
Written by EduInvesting Team | 25 July 2025
Tags: Tamilnad Mercantile Bank, TMB, Private Sector Bank, Q1 FY26, EduInvesting Premium, Undervalued Banks
