Shares Of The Russian "Do-It-All" Have Tripled Since 2020

TCS Group Holding (IOB:TCS.IL), which runs Russia's leading online bank (Tinkoff), has become an investor's darling and is considered as a technology and a banking play. Capitalising both on the post-pandemic recovery and on a faster digital transformation in Russia.

Back in October 2020, TCS got widespread attention as Yandex tried to take it over through a $ 5B deal, however, the deal fell through as both companies disagreed on future cooperation.

Although the market and analysts were motivated by a possible deal, TCS was still seen as having a strong standalone potential to further develop the business, and reported record-high profits and 40% ROE in 2020. Recent news revealed TCS' 2023 strategy, with a focus on further product cross-selling as it now only counts 1.5 products per active client.

"TCS has developed a great product in both lines, and, second, there remain huge potential organic growth and market share gains up for grabs over the next few years" Andrew Keeley of Sberbank CIB

Finally, TCS is also focussing on retail investors who are flocking to the Russian equity market. It could acquire 18m active customers by end-2023 (up from 10m as of 1Q21) and boost cross-selling within its ecosystem.


BENCHMARK'S TAKE

  • Banking penetration is growing in Russia as digital banks manage to cut costs and break through geographic barriers
  • Tinkoff is building Russia’ super app by offering insurance, travel deals, trading solutions, CRM tools and website builders
  • The bank has gained numerous awards, has excellent reviews from its customers and is growing in the midst of the pandemic

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