Everything so far has assumed a company that buys inputs, makes something, and sells it. A great many listed Indian companies do not work that way at all — and applying general ratios to them produces confidently wrong conclusions.
Banks
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| Metric | What it is | What to look for |
|---|---|---|
| NIM | Net interest margin — the spread between lending and deposit rates | Stable or rising. But always check it against asset quality: a high margin earned by lending to riskier borrowers is not skill. |
| GNPA / NNPA | Gross and net non-performing assets — loans that stopped being repaid | The single most important bank number. Below 2% gross is healthy; above 6% is a serious problem. |
| CASA ratio | Current and savings deposits as a share of total deposits | Higher is better — these are the cheapest funds a bank can raise. Above 40% is strong. |
| Provision coverage | Provisions held against bad loans | Above 70% means losses are largely already recognised rather than waiting to arrive. |
| Cost-to-income | Operating expense as a share of income | The best Indian private banks run near 40%. Above 55% is inefficient. |
| CAR | Capital adequacy ratio | Regulatory minimum with buffers. Close to the floor means an equity raise, and dilution, is coming. |
| Slippage ratio | Fresh bad loans as a share of the book this year | The forward-looking measure. GNPA is history; slippage is what is happening now. |
NBFCs
Similar to banks but with one crucial structural difference: NBFCs cannot take deposits, so they fund themselves in the wholesale market. That makes their cost of funds volatile and their survival dependent on continued access to credit.
- AUM growth — assets under management. Growth far above the industry usually means either genuine share gain or looser underwriting. Establish which.
- Cost of funds and spread — the gap between borrowing and lending cost. Watch what happens when rates rise; NBFCs cannot reprice deposits the way banks can.
- Asset-liability mismatch — borrowing short to lend long. This is what caused the IL&FS and DHFL crises, and it is disclosed in the annual report.
- Collection efficiency — the share of scheduled repayments actually received. The fastest-moving indicator of trouble.
IT services
| Metric | Why it matters |
|---|---|
| Constant currency revenue growth | Strips out rupee movement to show underlying business growth. A weak rupee flatters reported numbers. |
| Employee utilisation | Share of billable staff actually on projects. Rising utilisation lifts margins without new business. |
| Attrition rate | Staff leaving. High attrition raises replacement and training costs and disrupts delivery. |
| Deal wins / TCV | Total contract value signed. The forward indicator — revenue follows deal wins by a few quarters. |
| Revenue per employee | Whether the company is moving up the value chain or still selling headcount. |
| Client concentration | Share of revenue from the top client and top ten. High concentration is a single point of failure. |
The rest, briefly
| Sector | What actually drives it | The number to watch |
|---|---|---|
| Pharma | US generics pricing, product approvals, and regulatory inspections | USFDA observations and import alerts. A single Form 483 on a key plant can wipe out a large share of profits. |
| FMCG | Volume growth versus price-led growth, and rural versus urban demand | Volume growth specifically. Revenue growing on price rises alone during inflation is not the same as selling more. |
| Cement | Regional realisation per tonne, capacity utilisation, fuel and freight costs | Realisation per tonne and utilisation. It is a regional business — north and south India can be in opposite cycles. |
| Autos | Monthly volumes, dealer inventory, discounting levels | Discounts. Heavy discounting to move stock means the reported volumes cost margin to achieve. |
| Real estate | Pre-sales bookings and cash collections, not accounting revenue | Pre-sales and collections. Revenue recognition is lumpy and tells you little about the current quarter. |
| Metals & commodities | Global prices, which the company does not control at all | The commodity price itself, plus cost per tonne. Company-level analysis is secondary to the cycle. |
Check yourself
A bank reports NIM up from 3.4% to 4.6%, GNPA up from 1.8% to 4.1%, and CASA down from 44% to 31%. What is most likely happening?
Simple bhasha mein
Har mareez ki jaanch alag
Dil ke doctor aur haddi ke doctor ek hi test nahi karte. Bank ko PE se aankna aur IT company ko NPA se — dono bewakoofi hai. Har sector ke apne do-teen asli numbers hote hain: bank ke liye NIM aur GNPA, retail ke liye same-store sales. Pehle yeh pata karo ki is dhandhe mein dekha kya jaata hai.
What to remember
- General ratios break at sector boundaries — a bank with D/E of 9 is normal.
- For banks: GNPA, NIM, CASA and cost-to-income, valued on price-to-book not P/E.
- NBFCs live or die on funding access and asset-liability matching.
- IT: constant-currency growth, utilisation, attrition and deal wins.
- For cyclicals the commodity cycle matters more than the company. Never screen every sector with the same filters.
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Common questions
Short, direct answers to what people ask about this topic.
- CASA ratio meaning in banking
- The CASA ratio is the share of a bank’s deposits held in current and savings accounts rather than in fixed deposits. These are the cheapest funds a bank can raise because they pay little or no interest, so a higher CASA ratio lowers the cost of funds and supports margins. Above 40% is generally considered strong for an Indian bank.
- the full form of CASA in banking is
- Current Account and Savings Account. The CASA ratio expresses money held in these low-cost accounts as a proportion of a bank’s total deposits, and it is watched closely because a high CASA base is one of the clearest structural advantages a bank can have.
- GNPA meaning in banks
- GNPA stands for gross non-performing assets — the total value of loans on which borrowers have stopped repaying, before deducting provisions the bank has set aside. It is the single most important measure of a bank’s asset quality; below 2% gross is generally healthy, while above 6% points to a serious problem in the loan book.
- why does debt to equity not work for banks
- Because for a bank deposits are its raw material, not a sign of distress — taking in deposits and lending them out is the entire business, so a debt-to-equity figure of 8 or 9 is normal, not dangerous. Applying an industrial leverage rule to a bank flags every bank as over-indebted, which tells you the rule is wrong for the sector. Banks are judged instead on GNPA, NIM, CASA and capital adequacy.