a 10 to 1 leverage and a measly 5% borrowers going kaput reduces my equity to half. Would be very wary of bottom fishing in MFI’s until clarity emerges on UP situation. Management hasn’t specified clearly the collection figures from various geographies - just giving out broad ranges.
On the flipside, if we wait for clarity, prices won’t be where they are today.
Disc: Waiting to take the plunge
India Ratings Places Satin Creditcare on Rating Watch Evolving
Ind-Ra expects to resolve the rating watch by May 2017 by either reinstating the rating (IND BBB+/Stable), or with a negative rating action.
Lower Collections could Increase Credit Costs: Satin’s average monthly collections improved to 69% in December (till 21 December 2016) from about 55% in November 2016 The microfinance industry is seeing the impact of the political situation in UP (especially western UP), Maharashtra (Mah) (due to impending state / local elections), Madhya Pradesh (MP) and Uttarakhand (UK). State-wise share as at end-September 2016 and collection in December 2016 (till 21 December) for key states such as UP (35%, 46%) and MP (16%, 76%) indicate that in case the political situation doesn’t normalise and collections do not return back to normal, the provisions or write offs in quarter ending March 2017 could be significant (Satin’s loan portfolio in such states was at 56% at 1HFY17). According to Ind-Ra’s analysis, if credit costs exceed 20% of portfolio in UP and MP (adjusting for off-book portfolio), the equity could be below minimum regulatory levels. Portfolio at risk (PAR) 30 and write-off increased to 0.61% in 1HFY17 from 0.48% in FY16; Ind-Ra expects PAR 30 to increase significantly in 3QFY17.
As always, rating agencies way behind the curve.
Its a dated one month old interview which came into print now.cash availability situation has v much improved in UP now.
Vivekji the date on interview is JANUARY 15, 2017
interview was taken a month back.availability of cash withdrawal is much more then 500 rsmentioned in the article.
ok thanks vivkeji. surprised if this is teh case as its a time sensitive topic!
Satin Credit Q3 Result:
PAT up 9.7% at Rs 16.45 cr vs Rs 15 cr YoY.
NII up 33.7% at Rs 91.2 cr vs Rs 68.2 cr YoY.
Commendable performance given the headwinds they had. They are now planning to move into low cost/affordable housing segment. Interesting move.
Q3 presentation: http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/18EE96D0_C6B2_43FF_94BA_98806B2257DB_182435.pdf
Q3 press Release:
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/97A4606E_828E_4131_AD1C_E401C8DDD3D8_182040.pdf
Q3 Results:
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/937CD27C_A93F_490D_B5BB_21A5A15B653A_150548.pdf
There is no mention in the presentation that whether they have taken refuge under RBI rule. It looks, they have taken , otherwise like Ujjivan and Chola, they would have mentioned in presentation
While the overall environment was tough, here are some negatives that stood out from Q3 FY17 results:
Disc: Invested
Understandable, as this MFI is most impacted by demonetization being present in UP. What’s there current collection rate? Are they back to pre-demonetisation levels? If not, when do they expect things to get normal? May be we ened to wait to see what the mgmt has to say in Conference Call.
@satishwe
It reminds me 2001 DOT com bubble. Each and every company wanted to work as IT company by having dot com in its business name. Similarly, now most of NBFC, HFC and MFI are presenting their case for Affordable housing as main Driver!!!
No up move in financial condition of companies who built affordable housing but all financial companies are taking affordable housing finance as their business Driver!!
Are we moving ahead of reality (too much optimism!!!)
Don’t forget quote…" This time it’s different"
Well a MFI company diversifying in HF is a positive for me. Also there is huge scope in housing finance and being in finance industry its a good diversification. Its a safe business too.
And affordable housing companies and housing finance companies can’t be compared. Totally different things.
But yes your point of enthusiasm regarding Housing finance is right.
Please note the following general principles while looking at any Bank / FI results:
A loan is classified as NPA only 90 days after its due date. What we see as NPA in Q3 results are loans with due dates before 30th of September. Redenomination triggered NPAs will not appear in Q3 results.
Only the “absolute change in Gross NPA” tells the real story behind NPA movement. Net NPAs get distorted by Provisioning, over which banks have a lot of discretion.
“NPA %” can be camouflaged by issuing fresh imprudent loans. It is also an internally inconsistent ratio since denominator is the current asset base and numerator is the default as of end of the PREVIOUS quarter (remember the “90-day past due” rule).
Asset quality will remain constant in Q4: Satin Creditcare
According to Singh, the company saw its collection efficiency improve to over 90 percent. Singh added that with political uncertainties behind us he expects a further bounce back in collection efficiencies in the poll-bound UP market.
excellent interview on mfi nbfc n hfc .good insights.
