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ICICI Securities Report
In our previous interactive session on micro, small and medium enterprise, we hosted a representative from a leading MSME rating agency in India and a key trend we observed was: textiles industry is performing much better than the rest of the sectors (steady improvement in Ebitda margin and early signs of re-leveraging).
With this backdrop and considering City Union Bank Ltd.'s ~10% direct exposure to textile sector and 50% exposure to MSME sector, we invited the management of City Union Bank Ltd., to gauge the industry level underlying trend and the behaviour in MSME segment and the current health of the bank's MSME portfolio. Key takeaways:
steady improvement witnessed in total stressed pool – it fell to 5% in December 2021 from 8% in June 2021; expects Rs 1 billion to slip into non-performing asset in Q4 FY22;
~85% of portfolio is rated on 1-4 scale, ~10% is rated on 4-7 scale (moderate risk) and ~5% is rated below seven.
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