The reason I prefer Ujjivan is because it’s valuations are cheaper, better geographic diversification and better GNPA and NNPA ratios. But both have some pain left in theNPA and pre-demonetization growth fronts. The valuation has caught up a bit as Equitas fell from Rs170 odd.
I will sound extremely biased towards Ujjivan so pardon me
In this business of possible tail risks, geography diversification must be very important. Ujjivan’s GNPA had been extremely low pre-demon (thats because their loan book was totally composed of group loans which have negligible NPLs). Their CASA is low because their strategy until now has been to garner institutional deposits. Hence, a lot of scope for CASA improvement as all branches are converted to SFBs. They only yet have ~100 liability branches. Samit Ghosh’s track record impressed me more (I’m not undermining Equitas management). And I love Ujjivan’s logo!!
Disc. core holding for very LONGTERM. Biased because invested or the other way round, I do not know.
Looks like equitas SFB is finally back on track reducing its npa’s and further provisions and improving operational efficiency. Equitas SFB decision to move aggressively toward secured loans is starting to show results.
How is Bandhan Bank placed vs Equitas n Ujjivan? Are tailwinds back for whole of the sector?
it was Demonetisation that separated men from the boys, Bandhan is incomparable with equitas or ujjivan, although these new kids on the block has a long way ahead, I think bandhan should trade on par with hdfc bank given its superior asset quality or return on avg assets/equity.
This 1 sector is where ocean of money that just lies underneath and the potential is still untapped, ofcourse high returns comes with high risk, having said that the indian economy is something that would just suck out whatever you drop in it
Disc: hold all 3 since their IPOs
3406957 shares have been bought for delivery today. It was last seen in 1st week of Jan 2018. In last 365 days, it is 4th highest day that has seen such a huge delivery.
Some fund off loaded 2,424,812 shares Yesterday. Despite this stock is steady, watch out.
Good coverage about company https://www.edelresearch.com/showreportpdf-36346/EQUITAS_HOLDINGS_-_INITIATING_COVERAGE-APR-17-EDEL
good that you posted an old report. I could see that the earning projections are missed badly for FY18. Clearly, why we need not follow them especially when the industry is in transition. They should stick to excel sheet and copying management commentaries.
Yes, due to black swan event for MFI in the form of demonatisation. Now, their 1. Mfi percentage of total loanbook has come down majorly. (a conscious decision by the management) 2. Collection efficiency is back up. 3. Deposits and casa as a percentage of total borrowings has gone up.
I don’t understand the expectation here. They failed in their main biz i.e. MFI which was supposed to be a simple business of lending to lower strata. They were given banking license to accelerate the financial inclusion and now they want to move up the value chain and serve relatively better off. How are we sure that they would succeed in this relatively complex biz of banking and multi line lending. The other day I saw an AU Small Finance bank branch at a prime location in Mumbai. I have talked to few Uber/Ola drivers in Mumbai. They told me that AU Finance is the prime lender in this predatory vehcle finance @18% leading to lots of distress among first time drivers/borrowers. One Uber driver promised me to take to an yard where 100s of abandoned vehicles financed by AU finance are kept. All defaulted and ready to be sold but nobody is interested. We must all request RBI to revoke their banking licenses for this fraud and bubble creation.
demon affected MFI the most of all industries. Relative to overall credit, MFI will always always remain a tiny percentage anywhere in the world .There is only so much scope to grow in MFI. Their long time aim is to be a full fledged bank, not just a small finance bank.
Listening to the concalls, you would perhaps get a feel that the emphasis is on minimizing risk while the opportunity for growth remains aplenty.
Annual Report FY18