ValuePickr Forum

CSL Finance Limited - Transition To NBFC

the gross npa are 0.02% …its almost nil

Yes, the reason is Promoter is very very careful in lending.
Track record of quite a few years despite being a small NBFC.

For last two days volume has been in higher side and delivery volume above95%. Company has clarified their all current financial status in last concall. Nothing much scary to me. But the price behavior makes some concern coz i entered at high price. 10% of my portfolio. Anything market knows that i dont.

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Good set of numbers midst of all negatives in the sector.

Total Revenue increased by 46.27% to Rs 15.81 Cr in Q3 FY2018-19 as compared to Rs 10.81 Cr in
Q3 FY2017-18
Net Profit increased by 29.79% to Rs 6.61 Cr in Q3 FY2018-19 as compared to Rs 5.09 Cr in Q3
AUM increased by 23.85% to Rs 322.29 Cr in Q3 FY2018-19 as compared to Rs. 260.22 Cr in Q3
Net Interest Income (NII) increased by 18.52% to Rs 11.05 Cr in Q3 FY2018-19 as compared to Rs
9.32 Cr in Q3 FY2017-18

Q3 Presentation:

good set of number but disappointed with no disclosure on NPAs… the disclosure norms needs to be improved.

it’s heartening to see how this company has been able to maintain its head above water amidst all the mess. they are constantly shifting their large ticket wholesale loans to small ticket higher yielding SME and school financing loans. thus while the valuations have come down, at the same time the riskiness of the book is coming down due to increase in SME and school financing. its like a positive double whammy.

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Credit costs have been coming down for last 2 quarters.

Q1 FY 19



Q2 FY 19


Q3 FY 19


I agree that NPAs should be disclosed in presentations even if it is 0 or close to 0. Its better to have everything in one place rather than pulling it out of several documents.

Company is on the right track. Even real estate market appear to be bottoming out. If they did well when RE market was bad, I think they should do well when it is recovering. SME portfolio is growing but I am little skeptical of this business. They don’t have core competency or track record in that business.

Overall, I think this story is likely to play out slowly over next 2-3 years. Company is selling at below book value which looks attractive. There may be hiccups along the way but low leverage and strong asset quality should provide some downside protection.


One concern with CSL Finance is its low liquidity in stock exchange. Trading volume is extremely low in both the exchanges. Price of such stock can easily be manipulated. A buy/sell order of even a few hundred shares can lead to stock hitting upper/lower circuit.

@Gaurav152 Is that you who converted 1,00,000 warrants to shares yesterday?

During this quarter

CSL Capital (Promoter entity) bought 3K shares approx
CSL Employee Welfare Trust and Employee Rajeev Mehra(COO) sold a same number of shares i.e. 15750 each respectively (co incidentally??? Aah no)

@Yogesh_s … By Any chance Do you know why they have kept Employees welfare trust out of Promoter group and they are using this amount for any CSR?

Results on 16th May…too short notice

Results out

Considering Liquidity issues in country results are not bad… But in absence of issues QoQ growth would also have been there

Important comments on same

AUM growth was restricted to 15%, due to liquidity squeeze and volatile market
conditions. It was a big challenge to raise funds at competitive prices in the second
half of the fiscal year
• Cash flows of wholesale segment are strong and can be used to fund the growth of
the SME retail segment
• Company’s low leverage is maintained with capital adequacy at 66% providing a lot
of scope for additional fund raising


overall this company is very good , interesting to see how management behave next couple of month ,as of now they are very good at managing risk.


Anyone attended yesterday’s conf call? Please do share notes.

Focus is on SME
Last 6 months have been difficult due to liquidity issues
Cost of borrowing was up by 50-100 bps due to same
But company is cautious on borrowing more with high cost
Wholesale segment providing enough cash flows to find some growth
Not difficult getting more borrowing as the NPA and leverage are one of the lowest in industry
SME yields are little lower than wholesale segment
Yields (IRR) target remains 16-18 pc
Productivity has been lower in last FY and focus is on improving productivity per branch (per SP). Increasing sales force as well.

Conference call transcript

@sammy11 any concerns on selling of Rajeev Mehra? And CSL employee trust as well? It’s continuous since last few months

While I am not sure how many shares he holds and what part of that he has sold, Rajeev Mehra quit sometime in Q4 and hence is not a company key man any more. I am also not sure how much to read into his selling and same for CLS Trust.

One positive angle could be selling shares in market to subscribe to stock options, which would be at lower cost. This has happened in the past when the promoter permitted the then CEO to retain his options at the time of his leaving the company (about 2.5-3 years back). This was because of the good relationship and that they parted amicably. Same could be the case with Rajiv also, albeit this is just guess work.


Thanks @sammy11. I was not aware about him quitting.

The company came into my notice as it is selling below book, typical from Graham’s era of investing. Now one thing we all know about financials is that it is very important to know the quality of the book, only then we should look at PB etc. Given that the company has had extremely low NPAs so far, can anyone shed some light on the following:

  1. How come it is able to maintain such low NPAs especially given that it operates in real estate developer financing, MSME loans etc? What’s it secret sauce?
  2. Is the approach in Q1 above scalable? i.e, can the company repeat this over and over the course of its journey to become much larger in size, and yet maintain the quality of its book?
  3. How prone is it to disruption? I read the con call transcript and the MD mentioned that the company is most active in the SME segment where the entities/people don’t even have GST registrations/PAN, so fintech would stay away from it. But can this be relied upon from CSL’s point of view?


Small uptick in results QoQ…which is good sign in turbulent times…

Management continues to focus on reducing wholesale book exposure…

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