I also got the dividend credited. Sorry for delayed reply.
Of over 34 lac warrants with promoter, he could convert only 15.5 lac warrants. Full conversion would have meant open offer trigger. Hence, rest of the warrants expired as warrants were valid till nov16. positive for minority shareholders.
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Any news about impact of Demonetization on this company ? Could not find anything on Google …
In the near term, ofcourse it’s a negative as reflected in the stock price. THey are predominantly into MSE lending and microfinance. Disbursals for this quarters will be slow, but they should pick up from Q3 onwards.
Disc: Invested
I was more worried on the NPA front
Slow loan disbursal for a quarter or two is still fine. However if the NPAs increase that can have adverse impact on this company as their base is not very big.
Unlike few other MFIs , this company didn’t issue any official statement on the situation about collection percentages etc…
The above is an old news of 1st Dec. Situation is improving gradually in most of the areas. All district collectors of these areas have been met and clearly explained the rationale of RBI relaxation on NPA recognition norms and that there is no waiver of any kind as has been interpreted and spread by some DCs. Industry associations have been pro-active. The problem is mainly lack of currency availability especially in western UP given the density of area and lack of enough bank branches there. For this company, MFI is a very small book of its own. It has some MFI book as BC and there the risk of NPA is only first 5-15% of the AUM. The book belongs to banks. It is mainly in MSME loans which is one notch above MFI. Even assuming worst case scenario of MFI loans facing recovery problems, MSMSE loans are unlikely to face waivers/politcial intereference.
Q3 numbers are out, both revenue and PAT is up YoY and QoQ. However due to equity dilution (~100% as compared to Q3-2015) EPS growth is disappointing.
I guess for next few quarters company has to grow more than 100 % PAT YoY to add value to stock. Which Looks difficult.
Views invited.
Disclosure : invested
Q4 numbers decared and as expected EPS growth(YoY) is almost flat due to increase in equity base and down QoQ… Seems like this might be trend for next quarter or two as well
Provisions and Loan write off have increased which is inline with many other MFIs declared in Q4 results. Maybe Demonetization effect.
High growth story story seems to be fizzling out
Disc : Invested
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Company planning to foray into Housing Finance
The moment I tend to ignore this company, it comes up with something to keep me interested and invested.
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Everyone wanting to enter Housing Finance makes it a crowded trade. During every bull market a sector emerges as a leader and housing finance is making a strong case for being one this time around. Everyone started IT/BPO companies at the end log last century and similarly for real estate and infra sector in 2003 bull run.
Only the sector leaders will emerge as winners at the end and really create wealth for long term investors.
What advantage would a new player like Capital Trust have when it comes to disbursing housing loans against established HFCs? My guess is newer HFCs might have to take riskier under writing calls to compete and hence should be traded cautiously.
Anyone know why CFO resigned the company?
Is capital trust Ltd cooking the books?
Can anyone in the know please help me understand how much Tier 1 capital is required for such a lender? I understand that 100% risk weights need to be applied to the MSME/MFI type of loans that CTL operates in. I want to understand what the CRAR% is in order to check the capitalisation of the balance sheet.
Since GST will move business from the unorganised to organised sector, will this have a large negative impact on Capital Trust’s business over time? Most MSME’s (which is the target segment for Capital Trust, 62% of their loan book) I would imagine fall under the ‘unorganised’ sector. Q1FY18 already shows a huge provision on account of bad loans, possibly the demonetisation effect beginning to surface in the financials now.
@abhishek90 if you still follow the stock, would appreciate if you could add your views on this as well. Views from others following the stock are also welcome.
Disc: I am invested in the stock and it forms 3% of my portfolio
According to this article GST is supposed to provide a boost to the MSME sector.
In Q!FY18 the TL grew by 56% (YoY) and 7% (QoQ). I am not worried about the provisions, that have dented the BL, considering that demonitization is still affecting the collection as this is going to be transient.
I will be worried if the TL growth falls.
Here is the investor presentation if anyone is interested.
thanks @investr for sharing the presentation, gives a lot of info and esp. pleased to see robust growth in their AUM’s. Another thing I noticed was their NII Margin has dropped both YoY and QoQ. Do you have any idea why this might be happening? Are they cutting their loan rates to expand or increased competition?
Although the article you shared is bullish, the word on the ground, esp. in places like UP which is the key market for CTL, is that business is severely impacted for the small scale traders, businessmen, etc. Maybe long run there will be benefits for the economy as a whole including MSME’s. thank you once again for your inputs.
I am not sure of the exact reason but yes, it is possible that they are cutting their lending rate. In a falling interest rate scenario it is very likely that they have reduced their lending rates.
As for the GST, no one really know the short term and the long term effects. It is all guess work as of now.
I believe in doing qtr to qtr checks on the company’s PL statement and taking action accordingly.
In a falling interest rate environment their leading and borrowing rates should fall together without much impact to their NIM. If lending rate is falling faster than their borrowing rates, then it will show up in the NIM which is what I think is happening here, unless i have missed a fine print.
Secondly another point I noticed but forgot to add in my earlier post is that their capital adequacy ratio has dropped to 39% in this quarter, which is understandable because their loan book is growing very fast. But this will again mean they will need to raise fresh capital diluting the equity again. do you have any insights into how this will play out for existing shareholders. they will need to keep diluting as they grow, so how do the shareholders gain ultimately?
In every business loan portfolio, risk increases as the ticket size increases and as the duration increases. This safest business loans are Micro finance, than SME/MSME and last corporate. Collateral/security is of little significance as providing collateral doesn’t mean the business will be successful. Top it with reduced yields on securitized loans means there is almost no benefit of a collateral.
But there is a catch in this theory, in corporate loans you get a lot of data point on industry/ company/cash flows to screen out potential risky companies (that’s why pvt banks managed to perform at the cost of PSU).
This means SME/MSME are the most risky loans you can make. And this company CAPITAL TRUST does exactly that. Coupled with small scale, 16% cost of funds (insane) and little known promoters means its a recipe for disaster. Honestly I can’t understand how it maintained 0% NPA record before demonetization!
Overall its always better to stick to companies focusing on consumer finance loans. Any kind of business loan has to share the business risk.
This forum has been really helpful in forming my views on the NBFC-MFI industry. Was reading their latest AR (I am new to reading ARs in general).
This graph on pg number 52 is obviously erred. (A simple indexation with the Sensex). Can such things be ignored or do they show any kind of negligence on the part of the company?
Is anyone still following Capital Trust? They have come out with Q4 results which show early signs of stability but there are mixed signals coming from the company.
Key updates
- CFO has resigned. This I believe is the 3rd CFO resignations in last 1.5 Years. (Last year auditor had also resigned)
- Written off NPAs to the tune of 37.23Crs
- Consol profit of 11.93crs in Q4 FY19 vis-a-vis loss of 1.2cr in Q4 FY18
- Total loans and advances outstanding has shrunk by 13.1% yoy - 649.4crs
Investor presentation has not been uploaded by the company yet. I am curious to know if anyone has met management in recent past and can throw some light on the state of business/operations.