CSL Finance Limited - Transition To NBFC

(swamiprasadpv) #41

From Annual Report : This is very interesting.
Another key trend that is playing out is shifting of savings from physical assets like gold and real estate to financial assets.
This could be a mega trend which has the potential to change the entire face of financial services in India in the long
term. Another disrupting force is the increased use of technology by various players in the financial services space with
disruptive business models. Mobile Wallets, increasing use of fintech platforms, Online Credit Scoring, Payment Gateways
and Digital Currencies will increasingly gain acceptance and change consumer habits. Aadhar is another disruptive force
that will make a huge impact in Indian financial Services.
Your management team sees a big opportunity emerging out of all these trends and has decided to scale up its existing
operations and pursue new avenues of growth. As a company we are embarking on a new journey to scale up our operations.

Disclosure : i am holding . will add more .

(Gaurav152) #42

might not be able to attend this year’s AGM. might be traveling at the time. Anyone travelling for the AGM? please update if going. should be an interesting one.
plus ppl who are commenting on the reduced topline, need to remember that it was only mid way through last year that they shifted entirely to lending business and therefore the numbers aren’t comparable. since a lot of income they had prior to last year came from investments side of the business

(Kushal Masand) #43

The shares and warrants have been issued @ price of 390/- whereas the current price is 560/-

(TT) #44

How is it interesting?

(RICHAJ) #45

Do you know WHEN the warrants and shares were issued? From what I recall from the AR, they were issued when the price was slightly below Rs.390 several months ago.

(vistag) #46

Huge potential for this stock to grow with the economy .

This stock has been lying under radar for many people, at a quick glance it looks like one more me too small cap NBFC in SME lending , however the beauty lies in the details ,the valuation numbers and the sector it is operating Excellent scope for growth and repricing as long as the GDP is growing .Highly underleveraged so far , they did dilute the equity but i am sure that will help the company in long term growth . The only downside i see is whether the company can manage its 0 NPA situation in a downturn environment, and whether the HNI investors are going to stick with it during the tough times. However that’s true again for all the small caps and hence the risk is identified and accepted.

I am looking for some alternate arguments

Discl: Owning 10% of Portfolio @400,views might be subconsciously biased

(vistag) #47

Yes , issued at 390. This did happen in September for some some of the Investors ,refer the BSE announcements page

(vistag) #48

Not an ideal scenario, but to be fair the stock price got significantly appreciated after the announcement. I still remember buying on 7,8 August around 400 when the announcement first came out

([email protected]) #49

Hi, Since you are watching this stock closely is this still a value buy with P/E around 19 inspite of a huge run up in the last couple of months.

(Gaurav152) #50

price to earnings is the last ratio you should look at while analysing a Finance company.

([email protected]) #51

Can you please let me know what are the parameters to be seen in this sector,I am new to equity investing, your input would be greatly appreciated.

(Gaurav152) #52

P/B is a better parameter for a Finance company than P/E. Some other things to keep a track of are cost of capital and yield along with the quality of the book including gross and Net NPA %. I would start with these to begin with. also one of the most important things to keep in mind is to track the underwriting procedure and quality of lending institution.
SO if you are looking at CSL, you would be better of tracking their underwriting and who are they lending to. you can get a hint from reading through annual reports and management communication with the shareholders and any press releases to begin with.

([email protected]) #53

thanks Gaurav, appreciate your input.

(Gaurav152) #54

no worries brother. you have come at a good place to learn. great resources and people available at valuepickr.

(arvind) #55

I think this stock should not be measured with P/E or P/B though P/B ~ 2.3 seems ok for NBFC in the current market. Company was in special situation security investment and has changed the line of the business. Current AUM is very less and considering the huge opportunity in the sme lending sector it can grow its AUM with more than 50% CAGR for few year. So the big picture analysis shows its great potential. Apart from having the risk similar to other NBFC Market is not fully aware of the management quality and their ability in this particular area. I went through the recent filings where they clearly explained the actions being taken and provided the business performance. I think this is early signs of good corporate governance. We can leverage some support from the marquee investors who are also trusting the management and guessing their ability in positive manner.
Disclosure: Invested 1% of my portfolio as I think it is having great potential but risky.

(vistag) #56

True. The transition is the key and scope for growth. They have been moving from Investment kind of profile to a Lending profile and this transition is being managed by a quality team but lying low under radar for now. The scope is immense also as long as the GDP is growing ,the finance sector typicaly grows twice the GDP rate in an emerging economy based on a ball park estimate. The hidden treasure is looking closely at the valuation numbers, you will be surprised, if there is slight growth this will definitely zoom in. However like all small caps , there is also significant risk in a down turn which needs to be taken into concern,

(sta) #57

Could you elaborate why every one is saying quality team?

(ravish) #58

Very good result delivered by CSL finance and worth reading the investor presentation.

(Yatharth) #59

If you want to invest here, be very very careful.
Go to screener.com and check its negative growth ratios.

(ravish) #60

Rather then go to the screener data plzz go through the last 6 month updates regarding their business and their allotment of shares. Even try to read the introductory write up here u will have fair knowledge of why and how the ratios are declining. A very good long term bet for any new entrant at current market cap. Many super investors have recently subscribed to the preferential share allotment. Just go through it and u will find if a compelling buy.