She must be investigated for mainstreaming the rumours on the CNBC platform. I have seen her tweeting misleading data and info quite often. This time she seems to be on a mission to prove something. Asking leading questions to the panelists etc. when the fund managers are themselves saying this is 1-2 week liquidity issue. So called flaw in the business model of NBFCs was there earlier too. Has anyone done a show to highlight the same?
There has to be some reason for good stocks to crash. Consider this is the time. I am reminded of Buffet’s famous quote ‘’ It requires only a pin to prick the bubble’’ for the prices to come crashing down. Now it has happened , we need to think strategically and start buying good quality stuff. In just 3 weeks portfolio is down 20%, but I am very positive. Govt cannot just sit and watch this mayhem
One simple quote, known to everyone…never average down…stock price movement makes money not people beliefs…I feel it would take sometime before we can see interest in any finance company…wrote just general thoughts…easy to say but myself found it very difficult to follow…
Looking at the recently imposed import duty on consumer durables, it looks like the govt. wants to curb consumption as it is putting pressure on our CAD. Considering these will most likely be passed on to the customer, it is very likely to affect consumption. Coupled with an increase in interest rates for the Customer due to the rate cycle, this should be a double whammy isn’t it?
Agree. There was an article recently in Ken on Aye Finance/Lending kart. Both into rural/SME lending. While, they are still at an early stage but definitely competition is slowly intensifying in this space. Current rich valuations of BFL may topple, if the growth rates tumble a bit (which I expect to happen). But, I am confident of BFL to deliver good returns over 3-5 year period considering their robust risk practices (as can be seen from their current NPA levels). Quality of credit and firm hold on your borrowers, would differentiate leaders from others in this sector. On these aspects, I expect BFL to lead the pack and consistently maintain good financial metrics (high RoA/CAR/NIM, low NPA). I would wait and add more as and when it corrects from current levels.
Disc- invested. not a buy/sell reco. pls do your own due diligence.
Please read through the below links. The answer to your question is - NO
Why do you think there will be no demand elasticity responding the price rise? 10% duty hike + 10% INR depreciation almost equal to approximate 20% price rise. It will be really strange if there is no short term impact on demand.
Please refer to the below study. It clearly indicates - For Durable goods (BF’s main business), the demand is more elastic in the short run. Consider cars. If price of of cars increase, in the short run people might use their current cars longer. In the long run, though, people have to replace their cars.
The opposite is true for consumption goods.
Disclaimer : Tracking, no position as of now.
Thought of sharing Jana Vembunarayanan’s article on BajajF from his blog, 9 month old
Its such a beautiful document showing in simple words the strength of the franchise called Bajaj Finance. Thanks for sharing!
At the sametime, I feel how relevant it is when people feel worried about import duty rise, interest rate cycle, PB ratio higher than historical average etc etc
Aren’t we talking about a long run horse where the horse has so clearly proven its worth repeatedly in the past?
Though price movement isn’t of great interest in this forum, one thing is 200DMA which it was holding to for last 2 weeks has been broken. Can some technical guy list the next levels to be watched? Thank you!
Though speculative, this article rubs salt on the wounds
Some divergent thoughts…no doubt, BFL is one of the great companies in India…but at this moment, I would not qualify it as a great stock, simply becoz of the premium I got to pay in the current macro scenario…no doubt, it will weather through better than most other players, but then I doubt if we can expect the same growth in the coming quarters as delivered in the past…So, I would wait for a decent correction in the stock to add further…just deviating a little here, I personally learnt the essence of the following statement “price is what you pay, value is what you get” the hard way over the last few years and hence generally cynical about paying up too much…I may be wrong. Pls do your own due diligence.
The way the leader of the financial pack Bajaj finance has cracked tells that headwinds in the sector shall remain for sometime.
Maybe more regulations will be implemented by RBI spooked the fall after MPC mins
Bajaj finance is better placed that most consumer facing NBFCs in terms of ALM and Capital adequacy. BFL has deleveraged to some extent in last 3-4 quarters.
One has to wait and see what conditions are imposed by RBI. Any Cash reserve requirements like SLR and CRR will hurt all NBFCs in general and make it better for the banks who already have such requirements. That is one key risk I would watch out for
But is not CRR,SLR related to bank deposit and current account? How it can be implement to NBFCs which does not have saving and current account concept?
CRR is the amount of cash a bank has to mandatorily keep with RBI in specified securities. The purpose is to ensure safety + liquidity of the bank. These specified securities hardly earn any interest. Now suppose RBI makes it mandatory for NBFCs to kee say 2% of its assets with itself, this 2% will earn say 6.5% compared to average yield of 10% of treasury assets of an NBFC.
This will drag RoAs down and may cause further liquidity shortage in an already liquidity starved time.
Deepak Shenoy`s view on ALM mismatch in NBFC ( includes view on BF starting around 6 min) .
It seems every adviser and market commentator is invested here. I think in case we have entered bear markets its downside will surprise many given the way bull markets end.
Disc: no position but interested if we are in bull market
Not only that, I know of many investors who did monthly SIP purchase of BF stock till last month. Looking at the beating it got from the market recently, it will take many quarters to recover the principal.
If Avanti Feeds was the best distribution story of 2017, Bajaj Finance will definitely qualify in 2018. No one seemed to have asked how a large NBFC can trade at almost 10 P/B at twice the price to book of Alphabet Inc. (parent of Google). Now, at this point, the growth guys are in shock to add further but it’s still not attractive enough for value guys.
Request to not to conclude one’s hypothesis and theories based on 2-3 month price movements, either on positive or negative side. Question is which companies will survive the crash and grow earnings/cashflow/RoE at a high positive rate. If Bajaj Fin does this, this drawdown will be a history, if not then we would have ignored the signals wrt its future business growth.
One may also verify which NBFCs at low PBV have performed better in the last 5-6 weeks and then make an assessment based on 3-5 year future growth expectations.