CSL Finance Limited - Transition To NBFC


(Raj) #81

@DEEPAK_AGARWAL, Are you still following the company? Any views currently in terms of growth plans & management integrity? Promoter shareholding reduced by about 3% (59 to 56) in the last quarter ( Q1 fy19). Any reasons …


(RadheyShyam Aggarwal) #82

It seems to be consolidating a bit after a long run. Company has its inherent strengths but momentum of growth is quite slow


(DAGARWAL) #83

No not holding currently as I believe these sector has got hyped and may be near to or at fair valuations …
So trying to avoid it for some time .
And to be specific about promoter selling , so it’s always negative , there can be personal reasons too .
No doubt about promoter integrity till now, will see if I get something in future .


(bullrun1988) #84

Sir there was some equity dilution about 1.65 lakh shares under ESOP and regarding share holding by promoters they already made announcement that some are their non-core promoter and they selling their holding


(Gaurav152) #85

the selling was largely done by some non core promoters… there is huge opportunity ahead of these guys. They have decent track record in lending till now and are very strong in their micro markets particularly real estate lending. company has been very good with timely disclosures. Nothing to complain as of now.


(Gaurav152) #86

Interesting update in the Q1 results is that the company is implementing Nucleus FInnone, for Loan origination and Loan Management. now this is a good sizeable investment on IT, even if it is on cloud…further indication of the appetite of the company to scale and formalize its processes for the impending scale up.


(Tanmay Jagtap) #87

Anyone from VP visiting the AGM?


#88

Anybody in touch with the management to understand funding constraints? I recall they were facing difficulty in raising bank funds even before this liquidity crunch started. It looks like it will take much longer to leverage their balance sheet adequately if at all they survive in the medium term.

Disc: Had tracking position exited before the carnage


(Raj) #89

I attended the AGM had a chat with the management team on the sidelines. They confirmed that they have short term funding issues as their sanctions are on hold by few banks. Next couple of quarters will be challenging for them.

Regards,
Raj
Disc: Holding. No trading in last many months.


(RICHAJ) #90

Any more insight from the AGM? Do you think the management has the capability to scale the company up significantly?


(Gaurav152) #91

2 quarters are immaterial…these are headwinds every company faces from time to time…long term investors need to just demonstrate some capacity to suffer with the mgmt to reap long term benefits.


(Raj) #92

Totally agree…I am hanging on…waiting for more correction to add further.
Regards,
Raj
Disc: Invested. No trading since last many months.


#93

Don’t you think this will face significant headwinds going ahead. It will find very difficult to raise bank funds given default by NCR builder Supertech. They have good proportion of wholesale mortgage which will scare many banks. Additionally, many larger peers have corrected so nothing great to expect in terms of additional returns.


(Raj) #94

All these are temporary problems and we will certainly not talking about it after a year. Management seems to be very upfront in talking about the headwinds they are facing and that gives a lot of comfort. I am sure they will find ways to tide over this crisis.

In an illiquid stock like CSL it takes time to build position and let it go. My time horizon is 5+ years in this company so I will just hang on unless management starts doing stupid things. I would better be adding on a severe correction from here.

Regards,
Raj
Disc: Invested and no trading in last many months


(Gaurav152) #95

Hi raj, did you get any more insights from the AGM from the mgmt?


(Gaurav152) #96

Its a misnomer, real estate financing is one of the best lending segments in india , its just got a bad name.


(Raj) #97

Hi Gaurav,
Most of the points discussed before and during AGM are the one which were discussed in last conference call. Some other operational issues discussed were:

  1. Their AUM is 280Cr right now.
  2. Presence is in 5 states.
  3. Gujarat operation has started.
  4. They want to have branch level profitability.
    Most important of all is “the funding issue” which they are facing. Credit lines from the banks have dried and approvals are not coming through.
    Regards,
    Raj

(Gaurav152) #98

the key question to ask with regards to most NBFC is : Will the company survive the consolidation?
in case of CSL the leverage is at comfortable levels of below 1 as per last BS, the company raised equity at prices higher than the current price,
this only strengths the chances of CSL surviving the industry consolidation, the growth might slowdown, but the valuations are so cheap that even slow growth will look like good growth.
its one of the cheapest NBFC on P/B basis, now the question is about the quality of that book, the good thing to keep in mind is that CSL had almost zero NPA’s even during the harrowing days of demonitization. which shows the book is very good relative to the valuations given to the book in current scenario.


(Sanjay Dave) #99

e47dfe74-182c-4e2e-ab78-efcb33ab95e4.pdf (1.2 MB)
d24802e6-bd12-4cad-96b9-36166daa1bd9.pdf (1.9 MB)
CSL finance results and result presentation … Q2 FY2019


(Gaurav152) #100

Some key highlights from CSL presentation:

Company has no ALM mismatch.
They do not have any borrowings from Money markets. They have good and consistent repayments from all their large wholesale lending.
Company concentrating on converting repayments from the wholesale book into SME lending.
Nucleus Finone about to go live.
The manpower investment is largely done and the cost efficiency should increase from now on due to growth from current branches.