Arman Financial Services Ltd

(Subash Nayak) #83

What you miss in your post is the central point/thesis of investing in Indian MFI (not Bangladeshi one, regulations change from countries to countries as far as MFIs are concerned). India MFIs charging 20-24% interest rate are any day far far far superior to the available alternatively like money sharks who charge upwards of 36-100%. MFIs are well regulated, have policy stability, have huge demand, and newer financial innovation like JAM, Aadhaar, Mudra bank are changing the financial inclusion landscape.

That MFIs operates in one of the politically touchy class of population, charges 20-24%, and still able to grow 50-100% yoy clearly tells that they are indeed working towards betterment of the society.

(navneet.daga) #84

Fair points but my thoughts on this (based on the research I did sometime back):

  1. Regulators everywhere have never looked out for the “little guy”. So even if they are regulated I dont believe that companies cant find a way around them
  2. I took the example of the Bangladeshi MFI as it was the “gold standard” in the MFI industry.
  3. I never said that all the companies in this space are like that. I am sure there are companies which are good and dont pressure their customers. But I was not willing to take the chance. I would say this again, this is my personal view.
  4. I am not talking about the financial viability of the industry at all. The industry might be financially very attractive but most of the companies in the industry do follow policies which I cannot stand by and hence not investing.

Hope that helps.


(sanjay agarwal) #85

yes mfi infact is a perfect form of socialism and capitalism both …its not at all usurious …imo

(sanjay agarwal) #86

Also as intrest costs are coming down and compitition also there they are reducing their rates of interest slowly but surely

(Gaurav Agarwal) #87

Religare initiated coverage with a target price of Rs. 338.

(v4value) #88

Looks like qip is coming up. Religaire was banker for satin qip too…

(nil_71) #89

Excellent !!!. That is why ‘Initiating Coverage’ Buy side and Sell Side are in tandem

(Kunal Parikh) #90

Hi everyone,

Arman just came up with their numbers. Here is the link.

  1. The net profit has gone up from 2.02 cr to 2.48 cr. on Q-o-Q basis. (22%)
  2. Revenues have gone up from 9.6 cr to 14.17 cr. (47%)
  3. Employee cost has gone up from 1.3 cr to 2.39 cr (83%)
  4. Interest cost has gone up from 3.54 cr to 5.54 cr (56%)
  5. Depreciation and Ammortization has gone up from 4.29 cr to 8.43 cr. (96%)

There is no news about current size of AUM, but currently the market value(155 cr) of the company is at a discount to the reported AUM of Q1 i.e. 187.22 cr. If we presume even a 20% growth in AUM, it will turn out to be 225 cr.

Perhaps markets are discounting the future growth prospects that might take a beating because of the demonetisation effect. Also, election in UP might impact the expansion plans.

Some questions:

  1. Is Mcap/AUM of 0.7(assuming AUM of 225cr) a bargain? I have read on the other threads that mostly valuation of 1 is appropriate for Mcap/AUM.

  2. Also, would demonetisation have an impact on disbursement and recovery?

  3. Is demonitization a bigger challenge compared to AP crisis? I ask because this company managed to grow even during AP crisis and if demonitization is not as big, then perhaps markets are discounting wrongly.

  4. Is the growth in depreciation of 96% normal? Also, I see that tax payment has slightly reduced from 1.04 to 1cr. Should this not have increased?

(vaibhav) #91

The fall has been brutal. Any word from the management?

(Gary) #92

@navneet_daga By that logic you should avoid holding all financial services companies. All the way up to the grand world of investment banking, customer is routinely taken for a ride (Pls read a book called too big to fail to realize how Goldman had bet against their advise to their customers !) . And for that matter, any healthcare company for the un-necessary surgeries they do or tea companies for the exploitation they do and so on. Even the grand world of IT companies ( I work for one) is so far from the egalitarian utopia, we all wish to see. Reality!

(Prem Bhat) #93

Results press release here .

Contains a note on “Management Statement on the Effect of Demonetization”.

Reproducing some extracts for quick/easy reading below :
“The industry in NOT in crisis and there is no need to be alarmed. This is a temporary
disruption for a noble goal and it seems the public at large has supported this move.
It will be business as usual in due course of time. The management remains committed
to ensure smooth day-to-day operations and towards the larger financial inclusion agenda.”

“We ask all of customers and investors to be patient and not to be anxious. In the
long-run,demonetization will only be a minor inconvenience to the company’s long-term
goals. Our business is very strong and we will manage to overcome the challenges of
demonetization very quickly.”

(v4value) #94

Very impressed by the level headed, mature and balanced statement. The maturity and long term orientation of management gets reflected in times like this. This will be a core long term holding for me.

(navneet.daga) #95

H Gary - I get the sentiment and agree with it 100%. I used to work for a IB front office so know a little but about misguiding customers. I think small business i the best economy you have but as you said reality. There are somethings which I find more heinous and some of the direct impacts of MFIs fall into it mostly because it impacts the bottom of the pyramid more than top of the pyramid!

But again as you said its very very difficult to find a “humane” and “moral” business to invest in. I am trying to convert most of my investment into green technologies even if the returns are a bit low! Its not a silver bullet but you at least get the satisfaction of some positive effect.


(rskothari) #96

Depreciation and Amortisation has gone up from 4.29 lacs to 8.43 lacs. Figures are not in crore. Considering lower base, 96% increase is not substantial to give a thought.

Dear All,

Any idea about consistent offloading of shares by Whole Time Director Mr AMIT RAJNIKANT MANAKIWALA.

Disclosure: Not invested. Tracking company for any investment opportunity.

(nil_71) #97

But Jayendra Patel is constantly buying as BSE announcements. He bought on 17th and 23 rd Nov. Stake moved from 5% to 5.03%

(rskothari) #98

Shareholding of Mr Amit, WTD goes down from 3.39% to 1.05% which is reflected in reduction in promoter holdings.

Dear All,

Remuneration of Promoters is very less as per AR. Are promoters getting benefit by other means which is not disclosed or I am missing something.

(bkasal) #99

Does anyone attended investor call or AGM… Any opinion on promoter credibility?

(Gaurav152) #100

anyone had a word with the management about the situation on ground?

(v4value) #101

I think Gaurav Sud ji who consults them on IR is on this forum. Request him to please help with his inputs as he will have ear on ground. Thanks.

(Kunal Parikh) #102

One interesting thing is the promoter is increasing his stake post demonitization. Some figures on business performance from company would help. Moneylife, which use to cover this company along with Satin, has removed the coverage last Sunday.