Planning to buy Bank of Maharashtra shares? Weigh these pros and cons first

Copyright © HT Digital Streams Limited All rights reserved. Equitymaster 4 min read 23 Oct 2025, 12:14 IST What does the future hold for Bank of Maharashtra stocks? (Image: Pixabay) Summary Bank of Maharashtra has been on the radar of investors for the past few years due to the improved asset quality reported every quarter. Should you buy? Bank of Maharashtra is a widely recognized PSU bank in India. It has carved out a respectable position for itself in the Indian banking ecosystem. Headquartered in Pune, the bank has more than 30 million customers. In the stock market, it has been on the radar of investors for the last few years due to the improved asset quality reported every quarter. That said, the stock hasn’t set the market on fire, and in the last few days the price has even taken a tumble. Bank of Maharashtra Share Price – 1 Year Source: Equitymaster So, what does the future hold? Let’s evaluate the pros and cons of investing in the stock. Advantages #1 Improvement in Fundamentals The primary reason why investors should consider the stock is the continuous improvement in fundamentals. A striking feature of the bank’s finances is that its net non-performing assets (NPAs) are among the lowest. The bank improved its asset quality drastically, with the NPAs going from 0.97% in FY22 to 0.2% in FY24. The current NPAs of the bank are about the same level. The lender has also maintained a healthy net interest margin (NIM) of around 3.9%. The improvement in NPAs resulted in the net profit of the bank multiplying almost 10 times from FY21 to FY25. In this period, the bank’s return on assets (ROA) grew spectacularly from 0.3% to 1.5%. This sharp improvement in fundamentals enabled the bank to raise capital last year. It raised ₹3500 crore via QIP route in 2024, strengthened its balance sheet and improved its capital adequacy ratio from 17.4% in FY24 to 20.5% in FY25. #2 Growth momentum is intact The recent quarterly results showed that Bank of Maharashtra is still on the growth path. Gross advances grew by 16.83% year-on-year, while retail, agri and MSME business grew by 16.94%. Retail advances grew strongly by 37.45% YoY. Bank of Maharashtra reported a 23.09% year-on-year increase in net profit at ₹1,633 crore during the September quarter, with net interest income (NII) rising 15.71% year-on-year to ₹32.48 billion. Gross NPA decreased to 1.72% as on September 30, 2025, versus 1.84% as on September 30, 2024, and 1.74% as on June 30, 2025. Net NPA decreased to 0.18% as on September 30, 2025, versus 0.20% on September 2, 2025. as on 30 June 2025. The ROA improved to 1.82% in Q2FY26 against 1.74% in Q2FY24 and 1.8% in Q1FY25. Cons #1 NPA Concerns The stock market is very sensitive to news about NPAs when it comes to PSU bank stocks… and for good reason. These banks have had serious problems with NPAs in the past and the market is always on the lookout for a possible repeat. Recently, the Indian financial sector has been plagued with a slowdown in loan growth due to concerns about loans going bad. This has been observed in the microfinance and the MSME sectors. In the 2QFY26 results, the bank’s gross NPAs on a percentage basis were under control, but the total amount of bad loans increased to ₹4,372 crore from ₹4,206 crore in the previous quarter. The net NPAs did not increase too much partly due to the provisioning policies of the bank. However, slips remain a concern. Gross slippage stood at ₹712 crore, compared to ₹730 crore in June. #2 Highly regulated sector banks are perhaps the most regulated companies in the corporate world. It is no different in India. Navigating the risks to the banking business associated with the regulatory environment is a constant part of daily management. Small banks, such as Bank of Maharashtra, must comply with the same regulations as large banks. The difference is that large banks, because of their extensive financial and human resources, can easily accommodate regulatory provisions. Small banks can sometimes find this more challenging. This is something that investors will have to consider. If there is any setback for the bank on the regulatory front, there will be a sharp negative reaction in the stock market. Conclusion Investing in banking stocks can be a good move, if backed by thorough research and a keen understanding of market dynamics. It is crucial to evaluate your investment goals and risk tolerance before considering any investment. With careful consideration and a forward-looking approach, you can take advantage of the potential within the Indian banking sector while navigating its inherent risks. For more details you can check the Bank of Maharashtra Fact Sheet and Quarterly Results on our website. For a sector overview, read our banking sector report. Happy investing. Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such. This article is syndicated from Equitymaster.com Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app to get daily market updates. more topics #equitymasters #markets premium Read next story