Don't Miss Out on the Action: Private Lender's Board Recommends Rs 5 Dividend!

The bank reported the highest-ever net profit of Rs 1029 crore in FY23, up by 15% YoY. 
In the fast-paced world of banking, where big names often overshadow their smaller counterparts, Tamilnad Mercantile Bank Limited (TMB) stands tall as one of India's oldest and leading private sector banks. With almost 100 years of history, the bank has a vision of extending banking services to the rural masses, which have long been neglected by larger banks. And with over 500 branches scattered across the country, TMB has made significant strides toward achieving this goal. 

Quarterly performance 

TMB's commitment to rural India is reflected in its latest financial report, which shows impressive YoY growth in key financial metrics. The bank reported the highest-ever net profit of Rs 1029 crore in FY23, up by 15% YoY. Operating profit also grew by 4% YoY in FY23, while net interest income (NII) witnessed a growth of 15% YoY in FY23 to Rs 2,094 crore. These numbers indicate that TMB's unique focus on rural banking has paid off, with the bank successfully serving a large segment of the population that other banks have overlooked.

But the good news doesn't stop there. TMB's net interest margin (NIM) increased to 4.46% in FY23, indicating that the bank is generating healthy returns on its assets. And, to top it all off, the board of directors of the bank has recommended payment of the final dividend, with a recommendation of Rs 5 per share of the face value of Rs 10 each (50%) for the financial year 2022-23.

Stock price movement 

Investors in TMB will no doubt be pleased with these results as the stock gained nearly 1% on Monday. And while the stock saw a muted debut on the exchanges in September last year, with a minuscule discount of about 3% against its issue price of Rs 510, it has found strong support around the level of Rs 399-400, and as long as it manages to hold this level, a pullback rally can be expected due to it’s in an oversold region. 

As for a valuation, the book value of TMB's stock stands at Rs 374, while the price-to-book value ratio stands at 1.09. 

All in all, Tamilnad Mercantile Bank Limited is a private lender that's worth watching.