Due diligence on two major Indian banks for a PE investor

Context

• Company Description: A global PE investor
• Client wanted to invest in one of two Indian banks and hence wanted to understand overall market attractiveness, competitive differentiation, scalability and operating model of two major banks and benchmark them against peers

Our approach

• Conducted market sizing exercise for loans, deposits and fee-based income for overall industry (including banks and NBFCs) across sub-categories and analyzed change in market share across 5 years
• Conducted 3 separate surveys across loan products and deposits to understand customer’s perspective of the bank and feedback:
• N=500 retail customer survey for retail loans (mortgage, personal, other unsecured loans)
• N=100 Commercial Vehicle (CV) loan customer
• N=100 Micro Finance (MFI) customers 
• In-depth interviews (N=100) with branch officials, credit managers, business heads, CV dealers, MFI agents, FOS and industry experts to understand processes, analyse role of different stakeholders
• Deep dive into business and operating models of the two banks and their peers across sub-categories
• Examined the points of parity and the points of differentiation across the financial metrics

Praxis value delivered

• Successfully provided client with investment thesis through deep analysis of value proposition of both banks
• Provided deep analysis into different sub-segments of the loan and deposits market along with revenue modelling for scale up