Manish,
Any idea as to why Capri Global is a non deposit NBFC? Don’t you think it becomes a serious player when it starts earning a spread?
Appreciate feed back
@RajeevJ
Hi Rajeev,
Frankly speaking i dont know.
I understand RBI regulations for deposit taking NBFC are different, must be more stringent.
Secondly it may not be a good idea for a small company like Capri to raise public funds, its a new company and doesn’t have any brand / recognition among the people. Public will be reluctant to deposit money with such NBFC.
FD rate of return ( risk free … almost) is about 9-10 %. So Capri will have to offer at least 11-12%. Then the cost of raising public funds is higher, you have to employ staff, do some marketing, paperwork and may have to take help of another intermediary , so my guess is that cost of funds in such case will be about 12-13% which may not be attractive.
Also, presently there CAR is very high at 89% ( 15% RBI requirement) and apparently they are not trying to grow very fast, in such case the extra funds ( debt) which they need, they can easily raise through banks.
The need for public deposit may arise when they have trouble raising funds at attractive rates from banks.
Will like to request other VP members to clarify.
Also if they can highlight the negatives in this story.
They had raised only 50 Cr debt in FY 15, so as they raise more funds will need to check their cost of funds, NIM etc.
Hi, what is MSME?
Regards
Another good quarter - http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/E675C2B2_0C72_4719_8F6E_A5B3FB1AF9BD_182508.pdf
… but the share price doesn’t move as usual. It was up on BSE and down on NSE today. Either the investors are clueless, no one is tracking the company, or there’s some reason which I don’t understand at all. But a ~500Cr Mcap company, EBITDA ~145Cr, making a net profit of ~100Cr paying real dividends ought to be priced higher. Well, I don’t control Mr Market, I can only continue to hold…
Disc: Long
I held for more than a year and exited with some loss. I thought its opportunity cost was hurting my portfolio.
infact i increased my holdings in this counter…i have patience to hold for 2 years…
I was disappointed with the results. The company has a low base and CAR of about 89 %. They have plenty of money to lend ( of course one has to exercise due diligence). Many of the branches are new and should have sufficient room to grow. In a scenario like this they grew only about 5 % in revenue.
Add to this the fact that the company is trading dirt cheap makes you think maybe there is something wrong which you don’t know but Mr Market does.
Also if the company cannot grow at a good pace then there is opportunity cost involved.
I had asked via email if they can give a segment wise revenue and growth yoy. ( between fund based real estate lending and MSME) and the no. of branches company had at end June 2015. The good thing is they replied in time. they did not provide the segment wise revenue ( which was expected otherwise they would have disclosed same to exchanges). No. of branches are 10. As per AR Fy 2015, no. of branches were nine. Also, I can see that the employee costs have increased by a decent margin yoy. so they do appear to be expanding but same is not being reflected in the results as yet.
I have reduced my stake at a loss but still holding the rest.
I reserve the right to be wrong.
Lot of folks still consider the promoters/management to be the same as that of money matters. There is a false negative perception about the company.
Also, housing finance isn’t the hot sector at present. Low growth can be witnessed in the whole sector. So quarterly numbers have been subdued.
My belief is, it’s not the best housing finance business but if one wants to invest in this for long, this is the best time to do so.
Disc :- Was invested in the past. Not invested currently. This is not a buy/sell recommendation. Do your own due diligence.
Manish, couldnt agree with you more. Multiple things disappointed me about this company. They never responded to my emails, that way, you were little lucky. 1)They haven’t been transparent about the role of Mr Rajesh Sharma and also whats the future of his holding… Mr Sharma still has significant amount of holding.
2)As I understand, Capri Global and Quintin E Primo III arent very actively involved yet… no communications so far about the future plans and guidelines…
3)On top of it disapponting numbers.
Ofcourse its attractively valued but I started feeling Mr Market know more than me
But patience could pay in this case, I couldn’t wait since I felt there are other better opportunities.
Good luck to Chaitu and hope the market recognizes it fast.
Yes, considering past management history only it is trading at dirt cheap valuation. Where as i have high respect for Quitin considering his past and present roles. The scam was done by Rajesh sharma, but it is not a case of company accounts manipulation. Most importantly i felt Mr.Market has digested and these are mostly known facts to everyone.
@manishcm,
w.r.t Rajesh/Ramesh sharma holdings, i feel they will be transferred to money matters india private limited.
Once in Feb-2015 @180 and another in July-2015 @140 it was done already. But as you rightly pointed out the current role Rajesh whether he is actively involved in decision making or not needs to be verified.
As explained in one of my previous post where i find good valuation gap between capri and cholamanadalam. 1 year back when i observed similar kind of valuation gap and missed a great opportunity between balaji amines (@60rs) and alkyl amines (@375rs). Though both are unique, different segments and different situations and i am hoping that this time i will be rewarded in longer term.
Finally as always Mr.Market is far better than everyone in all the senses and let us see…
Disclaimer :
Actually i exited capital first @360 levels and i bought capri global @150 levels some time back.
Rajesh Sharma is a non executive director, and not getting any salary. I won’t bother much about him as Capri has got almost 48% stake. Why would a promoter let another steal from the company unless they both are stealing.
Also, since Rajesh Sharma is holding 25% in Capri , he would be more interested in business performance and stock price going up than us.
Here are a few old links to chew on:
Obligatory reference to screener:
https://www.screener.in/company/CGCL/
Growth is slow, but there is massive undervaluation in this stock for sure.
As per BSE announcement, Capri GLobal has launched a wholly owned subsidiary for Housing Finance and has got registration from NHB.
Seems like a positive move.
1 Like
This is very much positive for the company and it will surely will have material impact on the financials going forward.
Dear All,
Disclaimer: I was an investor in Capri Global however i have sold my shares today.
I just want to highlight an observation in Q2 & Q3 FY16 results - which I consider bad as well as borderline unethical reporting.
In Q2 FY16 results, the company reported “Other expenses” as 199.58 Lacs.
However, in Q3 FY16 results, the same expense is split into “Bad Debts Written off” as 609.37 Lacs and “Other expenses” as 498.26 Lacs.
Now following is what my inference:
While reporting Q2 FY16 numbers, management did not want to tell investors that they are writing off debts.
But now after Q3 FY16, management thought this time we need to tell them as the amount being written off is very high (2962.28 Lacs written off in Q3 FY16) and just regroup the Q2 FY16 numbers.
Anyways, mentioning debt write-off as other expense is not acceptable.
Anyone with a different view is welcome to contribute.
Hope this would help fellow value investors.
Cheers,
Django
2 Likes
A Zebra can’t change its stripes
1 Like
Waiting for the fourth quarter results. Hopefully, it should be good. Company has received the license for housing loan business. Hoping for some update from management on this. Shareholding of this company is very good. Retail holding is only 3%.
1 Like
any idea why the stock tanked 15% to 52wk low. Any specific news?
Disc: long (residual stake)
1 Like
Notes from AR 2016.
- Started two new subsidiary, one in HFC and another in Asset management. They will start operation from this year.
- CEO got 4L ESOP alloted , vesting start from Oct 16, vesting period of 5 year. Linked to performance on ROE. Priced at Rs 200. We are getting share at 150. This is interesting development.
- They reduced focus on wholesale lending.
- Wrote off 65 Cr loan. If not done PAT would have been inline. Good to do cleanup at this stage.
5 40%+ growth in retail lending. - Good CSR activities in different area of society.
- More focus in MSME and retail funding.
- Employee strength increased to 380 from 260 range.
- Branch increased from 9 to 23.
- Plan to increases branches and move to south India.
- Still Ghost of Rajesh Sharma present. Though he was given clean chit by courts, Indian investor will never forget it. It looks like.
- Capital adequacy ratio 79% against regulatory need of 15%. Enough space for growth.
- Employee expense has increased should start giving fruitful results.
- Business promotion expense also increased substantially.
I did analysis on objective basis leaving Rajesh Sharma ghost aside. Increased my conviction.
Disclosure:- I hold 2% of my portfolio in this company since 2015 so my views may be biased.
5 Likes