Tamilnad Mercantile Bank Receives 'Hold' Rating from MarketsMOJO Based on Strong Financials and Technical Indicators

Tamilnad Mercantile Bank, a midcap private bank, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on the bank's strong financials and technical indicators.
One of the key factors contributing to this upgrade is the bank's high Capital Adequacy Ratio of 22.53%, indicating a strong buffer against risk-based assets. Additionally, the bank has shown healthy long-term growth with an annual net profit growth rate of 33.80%.

Technically, the stock is in a Mildly Bullish range and has shown improvement from a Sideways trend on 18-Sep-24. The Bollinger Band, a key technical indicator, has been Bullish since 18 Sep 2024.

Attractive valuation is another reason for the 'Hold' rating, with a Price to Book Value of 0.9 and a ROA of 1.8. However, the stock is currently trading at a premium compared to its average historical valuations.

In terms of financial performance, the bank reported flat results in Jun 24 with a PBT LESS OI(Q) of Rs 149.68 cr. Non-operating income accounted for 60.96% of the profit before tax.

It is worth noting that despite its size, domestic mutual funds hold only 0.18% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

In the last 1 year, Tamilnad Mercantile Bank has underperformed the market (BSE 500) with negative returns of -10.57%, while the market has generated returns of 34.92%. This could be a cause for concern for potential investors.

Overall, while the bank has strong financials and technical indicators, it is important to consider the underperformance in the market and the low stake held by domestic mutual funds before making any investment decisions.