Request you to have a relook at Magma. There was an accounting change in FY12 which resulted in lower income being recognised. As per the com Sep 2012 was the last quarter for the temporary setback to finish.
The Fy 11 ROE was 23 %. From the current ROE of 9% it should normalise to that level in FY 14. Same is the case with ROA. They havent securitised their loan book this year and will be doing it in second half, so that should also help ROA.
They seem to be an excellent play on rural finance. Just started the general insurance business and gold loan business and have recently acquired housing loan portfolio of GE Cap. All these business seem to be complimentary with their current distribution channel involving vehicle dealers and feet-on-street.
Branches increased from 200 to 240 this year. Very conservative company which writes-off default loans over 180 days leading to no NPAs on the book. Writeoff itself is only 0.48%. NIM is 4.91%. Cost of fund is low at 10.6%.
Reading the annual report, con-calls and investor presentations makes me feel they are lining up the foundation for a great rural based finance company. The opportunity size seems to be impressive.
Currently available at a forward PE of 13-15.