Gruh Finance has annouced Q2FY15 Results.
| In crores | Q2FY15 | Q2FY14 | H1FY15 | H1FY14 |
|---|---|---|---|---|
| Revenue | 257.53 | 210.5 | 499.34 | 393.1 |
| Net Profit after tax |
43.09 | 34.35 | 85 | 68.12 |
| EPS Basic | 1.192 | 0.957 | 2.352 | 1.901 |
Quick Q on Q comparison
performance on the key financial parameters is as follows:
(Rs. in crores)
|
Particulars |
Half Yearended September 30, 2014 |
Half Yearended September 30, 2013 |
Growth % |
|
Net Interest Margin |
159.52 |
124.87 |
28% |
|
Non-Interest Expenses |
33.32 |
29.20 |
14% |
|
Operating Profit |
142.47 |
107.92 |
32% |
|
Profit Before Tax |
128.71 |
95.54 |
35% |
|
Profit After Tax |
85.00 |
68.12 |
25% |
|
Loan Assets |
7910.15 |
6142.90 |
29% |
|
Loan Disbursements |
1503.15 |
1197.15 |
26% |
Another routinely well executed Qtr
Very predictable pattern..stock seems to be going nowhere though
Disc..invested. mean price 190
Looks like below was the reason for todayâs sudden rise of around 6%
PMO directs EPFO to invest 15% funds in low-cost (<25 lakhs) housing:
Dear Shareholder,
We are pleased to inform you that the Unaudited Financial Results for the Quarter / Nine months ended 31STDecember, 2014, have been approved by the Board of Directors of the Company at its meeting held on 19THJanuary, 2015.
The performance on the key financial parameters is as follows:
(Rs. in crores)
|
Particulars |
Nine Monthsended December 31, 2014 |
Nine Monthsended December 31, 2013 |
Growth % |
|
Net Interest Margin |
247.53 |
193.72 |
28% |
|
Non-Interest Expenses |
48.42 |
43.11 |
12% |
|
Operating Profit |
223.19 |
169.40 |
32% |
|
Profit Before Tax |
195.95 |
151.26 |
30% |
|
Profit After Tax |
129.74 |
103.36 |
26% |
|
Loan Assets |
8382.43 |
6544.60 |
28% |
|
Loan Disbursements |
2248.40 |
1824.74 |
23% |
A copy of the said results is attached for your information. You may also access the Press Release issued in this regard from the website of the Company atwww.gruh.com
With best regards,
Marcus Lobo
Company Secretary
GRUH Finance Limited
- First of all, thank you to Hitesh Patel for building my conviction in what seemed to be an extremely over-valued stock like Gruh.
I entered Gruh in October, a couple of months after the SEBI guidelines on Analyst recommendations. However, just by the regular comments (no Buy/Sell recommendations) of the seniors here, I could make up my mind and enter this terrific company. It would be great if the seniors contributed more with just their honest insights around the company/their businesses.
- I canât believe a 25% compounding machine like Gruh only has a 3 page thread! Either too many people just view it as over-valued and look for other opportunities or they donât need much discussion on this fantastic company and just invest straightaway. Would love to know the reasoning.
Couple of point from the PDF the company attached in their e-mail:
-
Gross NPAs of the company are 0.57% of the Loan Assets as on 31st December, 2014as against 0.46% as on 31st December, 2013. As a result Net NPAs of the company are 0.07% as of 31st Dec, 2014 as against Nil on 31st Dec, 2013. Wondering how the Net NPAs were Nil last year???
-
They have written that they have been using the straight line method of depreciation for all class of fixed assets from 1st April 2014. Previously it was only being used for depreciating buildings while other fixed assets were being depreciated using reducing balance method.
Therefore, charge on account of depreciation for 9 months ending 31st Dec, 2014 is higher by 1.27 crore as compared to last year.
Would be interesting to hear everyoneâs views on these developments.
Hi all
I have one confusion. After allotting ESOPS , Gruh have dilution in equity thus growth of EPS decreased which is increasing the PE which is negative . But also we knowdiluting equity at high P/B helped the company on availability of capital for growth and further leveraging which is a positive. So how i will take this dilution of equity through ESOPS? Negative or Positive ?
Amitayu
ESOPâs are always a negative for minority shareholder as unlike in the case of dilution, money does not come into the company (at a higher valuation) that can be levered up.
In ESOPâs, money goes from shareholder;s pockets into employee pockets - no one else benefits. That said, a good ESOP creates loyal employees and millionaires like infosys, google which makes shareholders billionaires.
Thanks Ragunathan for making the confusion clear. For gruh , my observation is the dilution through esops is slight which does not make much variance in eps . let me know if i am wrong.
RBI eases norms for home loans for up to Rs 10 lakhâŚ
Experts,
where do you see hawkins eps - fy 17 . Say , close to 10 ?
Credit demand wonât pick as GRUH MD for next 2-3 qtrs, thats why its share is on a downward trend recently
Ashish, New RBI home loan will benefit the small borrowers thus it is advantage for gruh⌠here is todayis interview of Sudhin Choksey , iMD Gruh Finance on etnow
Dear Seniors,
Hi Sir,
I am Mukul Aggarwal, currently working in Bangalore. I am graduated from MDI and was a student of Prof. Sanjay Bakshi. I have just finished reading Basant Maheshwariâs book âThe Thoughtful Investorâ and putting my first steps in the field of value investing. The book has acted as a catalyst for my investing career. I am doing some research on HFCs (focusing on rural individual in LIG segment). So I am interested in GRUH and REPCO.
I have following two questions to ask:
-
Are the Rural HFCs fairly insulated from the macro economic environment and can be categorized as a structural growing business with predictable growth? My understanding is that they are fairly insulated from the overall economic environment. The reason I am asking is that can I apply a long term (10 yr) model for GRUH, REPCO with the same certainty as a consumer company like Relaxo/Page/ Hawkins?
-
GRUH performance in period 1196-2000 was very disappointing (profits declined, ROE was in low single digits, they also stopped dividends). I have read the annual reports and the key reason they highlighted was tough macro environment and political uncertainty. Do you think this kind of situation can occur in future where the performance declined so much? Are these cos. so much vulnerable to economic conditions?
-
Do GRUH, REPCO have moats? As my understanding they have some moat beacause of switching costs (like banks) but are they becoming or on track of becoming a brand like HDFC in rural/semi-urban space?
Please take some of your precious time out to address the above queries and share your enlightened thoughts.
Thanks,
Mukul
Mukul,
Both Gruh and Repco are semi rural HFCs with presence in both rural and urban centres. I think looking at the past track record of these entities one can apply atleast a 5 year model.
I think pre 2000, gruh was not an HDFC subsidiary and its stellar performance began only after it got acquired by HDFC which provided it with necessary managment band width.
Coming to moats, these companies usually cater to some of the non salaried class who find it difficult to approach banks due to lack of documents and such other problems. And once the economy recovers, banks would be more interested in loaning out to bigger ticket loans rather than meddle with these 10-15 lacs loans bcos these smaller loans would not alter their balance sheet growth too much. But for the smaller nimble focussed entities like repco and gruh, these would remain their focus areas. Both these companies are present in a handful of states only and so I feel thereâs a long run way for them to grow.
6 Likes
Thanks very much hitesh for the valuable thoughts. If I talk in terms of the risks with these two HFCs (if I assume the growth will be there) then for:
GRUH: High valuation (which I comfortable with as I am looking it as a long term play). Any other risks that come in your mind?
REPCO: Asset Quality & Management Quality. I am not sure about the integrity of the management as well as the very rate that it has grown in the past (40-50%)
I was reading the REPCO IPO prospectus and found out this. Can you please share some thoughts on it?
Certain investigations are pending against our erstwhile managing director and erstwhile executive director
and the outcome of such investigations, if adverse, may affect the reputation of our Company
The Central Bureau of Investigation (the âCBIâ) had issued summons dated May 5, 2011 under section 91 of
the Criminal Procedure Code, 1973 which requisitioned information and documents in relation to the
remuneration of Mr. M. Balasubramanian (in his erstwhile capacity as the managing director of our Company
and of our Promoter). Thereafter, the CBI submitted a confidential investigation report to our Promoter in
relation to (i) the revision and payment of remuneration to M. Balasubramanian, in his capacity as the erstwhile
managing director (the âerstwhile MDâ) of our Company and the Promoter, (ii) the payment of remuneration to
Mr. S.V. Balasubramanian, in his capacity as the erstwhile Executive Director of our Company (the â erstwhile
EDâ), and (iii) the erstwhile MDâs alleged improper sanction of certain loans from the Promoter to his relatives.
The total amount allegedly misappropriated by the erstwhile MD by claiming inter-alia excess pay, exâgratia
payments, excess performance incentive and notional interest loss without the approval of our shareholders
xviii
aggregating to 8.97 million. Similarly, the amount allegedly misappropriated by the erstwhile ED by claiming exâgratia payments and excess performance incentives was 0.32 million and the notional interest loss on the
aforesaid components was 0.13 million, aggregating to 0.45 million.
Further the erstwhile MD, in his capacity as the managing director of the Promoter, allegedly improperly
sanctioned certain loans from our Promoter to his relatives resulting in losses aggregating to 13.55 million to our Promoter. The CBI requested sanction for the prosecution of erstwhile ED under Section 19(1) of the Prevention of Corruption Act, 1988 (the âPCAâ). This agenda was placed in the 56th meeting of the Board held on November 1, 2011 and the same was deferred to enable the Government of India to examine the matter. The MHA by its letter dated November 29, 2011 (No. 10/3/2003-RHS/MD) advised the Company to take necessary action to sanction the prosecution of the erstwhile ED. Further, the MHA by its letter dated January 16, 2012 stated that the continuance of the erstwhile ED would not be in the interest of the Company and advised that the matter regarding the removal of the erstwhile ED in addition to sanctioning his prosecution may be resubmitted to the Board for their consideration. The Board at its 57th meeting of the Board held on December 8, 2011 took cognizance of the allegations set out in the CBI Report and granted sanction for prosecution of the erstwhile ED for offences punishable under Section 120B read with Section 420 of Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(d) of PCA. The Board also recognised that the erstwhile ED had refunded an amount of 0.32 million to the
Company on October 29, 2011.
The Board recommended to the shareholders to accord sanction to the prosecution of the erstwhile ED for the
offences set out in the paragraphs above and resolved to convene an extraordinary general meeting at a shorter
notice. The shareholders, at the meeting held on December 8, 2011, accorded sanction for the prosecution of the
erstwhile ED under section 19(1) of the PCA. The ED tendered his resignation from our Company on February
2, 2012 with effect from February 29, 2012.
We have not received any further intimation regarding the matter from CBI or from any other regulatory or
judicial authority. We cannot assure you of the outcome of this matter and it may result in an adverse effect on
the reputation of our Company.
Erstwhile ED and director are no more involved in running the affairs of the company so I dont think it should matter too much.
I feel they have come clean on past sins created by ex employees which to me seems like a good sign.
One has to decide what is ignorable and what is not while evaluating info on a company.
And when the stock price has gone up from listing price of 170 odd to 600 odd, it seems markets have ignored the piece of news you are alluding to.
Sometimes the problem of too much in depth research is about getting stuck with some mundane matters and not being able to move ahead.
4 Likes
Thanks for the clarification and the invaluable tip. Completely understood your point.
Cheers
Is now a correct time to enter this stock, after correcting to Rs 226 ?