Capital First is on the track of growth
In consumer newspaper advt. Capital first name comes along with Bajaj fin.
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VCCircle has an article titled âExclusive: Warburg Pincus-backed Capital First looks to diversify loan book with M&Asâ It is a premium aticle. Anybody who has seen this article, please give the gist of itâŚthanks
Impressive Q2 FY17 investor presentation by the company.
However my concerns from the Q2FY17 consolidated results are;
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Other expenses increase to 63 cr from 33 cr YOY and 48 cr QOQ? How can we explain this (Is it the commission paid by the company to dealers or agents?) . Of course we have to wait for Annual report. Hope it is not a way to siphon the money by management.
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Increase in the finance costs by 85cr ( 211cr to 296cr) YOY basis. The company has paid 85cr more interest to itâs lenders.
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Increase in the cash balance by 1100 cr ( 1112cr to 2233cr ). The company has raised more money from itâs lenders so that it can disburse to its customers more. Does this mean capital first has become more aggressive in lending money thereby increasing the risk of NPA in the coming future? When it has so much cash balance , what is the need to raise more money and wasting the extra 85cr finance costs as interest payment to itâs lenders?
These are my observations. Kindly correct me if I am wrong.
Disclosure: Invested; 8% of portfolio
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Can any one share about his/her knowledge on LAP ? Given so much noise on LAP. I feel if HDFC is not falling ? that means they are doing something different than others
Market trusts book of HDFC and HDFC bank as gold
Steady Q2 for Capital First
Capital First pegs overall growth of its assets at 25%
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Capital First raises funds http://www.indiainfoline.com/article/news-top-story/capital-first-raises-of-rs-340-crore-from-affiliate-of-gic-singapore-116111100526_1.html
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Hi Santosh,
Not heard from your end for so long, on this forum
Are you still holding CAPF?
I have got a positive bias for it & have been holding a sizeable quantity now.
Hi @bsahni
I donât hold it anymore. But I still like the story.
LAP portfolio remains the key risk along with growing provisions
Other NBFC got cheaper in correction so switched to them
Best
Santosh
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Thanks Santosh for instant reply.
CAPF & BF Collectively complete Financials slot in my PF.
Regards,
Bharat
This non-banking financial company is engaged in mortgage financing for micro, medium and small enterprises (MSME), consumer durable loans and wholesale credit.
Though the counter is not quoting cheap (PE of 33), valuations are justified because of high earnings growth.
Even after the downgrade in estimates due to demonetisation, the NBFCâs loan book and net profit is expected see an annualised growth of 30 and 38% respectively between 2015-16 and 2017-18. Since Capital First focuses on MSMEs and consumer durable loans, it enjoys a high net interest margin (NIM).
The expected fall in the interest rate structure will reduce its cost of capital and may result in higher NIM. Capital First was also able to maintain its gross NPA and net NPA levels at 0.98 and 0.45% respectively (as on September 2016) and since cash transaction mix in its loans portfolio is low, there may not be big risk to asset quality on account of demonitisation.
Its consumer durable finance segment is doing well and Capital First plans to get into home loan in tier-2 and tier-3 cities. A very high capital adequacy ratio (CAR) is another positive aspect for this counter.
With its CAR estimated to be at 22% by March 2017, there is no limit in its growth prospects.
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Management interview
Disclosure: Invested
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âLast month, the World Bankâs private-sector investment arm said in a disclosure that it will invest $100 million in Temasek-owned Fullerton India Credit Company Ltd and $50 million in Warburg-backed Capital First.â Warburg announced earlier that they are planning to reduce itâs stake.
https://www.vccircle.com/ifc-to-invest-10-mn-in-b2b-firm-power2sme/
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Q4 results are out yesterday. Good growth in their financials overall. Comparing 2017 to 2016,
- Total income grew by 65%
- PBT grew by 42%
- PAT up by 44%
- Diluted EPS up by 38.5%
Other improvements in Metrics (from their investorâs presentation):-
- Credit Rating moved up from AA+ to AAA.
- Gross NPA is down from 0.98% (Q2 2016) to 0.95% (FY 2017)
- Net NPA down from 0.45 (Q2â16) to 0.3 (FY 2017)
- CAR improved from 19.14% (Q2â16) to 20.34% (FY 2017)
TTM P/E is now ~ 34. Fairly valuedâŚ(Disclosure - Invested, Looking to accumulate).
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In spite of good results, stock is down. Does this mean that market knows something, we are unaware ofâŚ
Disclosure: Invested from lower levelsâŚ
This means that good results were already factored in and the tradres are liquidting their longs
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Apparently, Warburg Pincus is selling a 10% stake in the price range 775-780. The stock is probably reacting to that.
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