Ujjivan Financial - Small Finance Bank

(lohiyaakshay08) #324

@Devang Apologies! I think they are not just allowed to be passed on. But anyway, the rest is just data, not much interpretations.

(Devang) #325

Can you tell me the name of analyst ?

(lohiyaakshay08) #326

Check Direct Message Box.

(lohiyaakshay08) #327

Sudha Suresh Clarifying things-

(lohiyaakshay08) #328

If someone is attending this, do share the summary notes-

(JayNach) #329

I haven’t attended quarterly results conference calls in India in the past so this question maybe bit basic/naive:

Can individual investors attend the Conference call today or we just get the transcripts post the event on the below link? If we can attend is there a phone number and time to tune in?



(lohiyaakshay08) #330

Yes, You can.

Call timing - Friday, May 11, 2018 at 11:30 AM IST.

Read attachment too

(lohiyaakshay08) #331

Turnaround results-


Disclosure: Invested

(lohiyaakshay08) #332

Few more insights

(Mayank Narula) #333

They did more provisioning (34 crs) than last quarter (27 crs). Hope this is last of demonization woes.

Status: invested with 12% of PF

(lohiyaakshay08) #334

They mentioned somewhere that they have made around 170 crore of prudent provisioning. I think it is just to have more cushion in future.

(Mayank Narula) #335

Yes. Company gave guidelines of Rs. 40-45 crs of tentative provisioning for next 3-4 quarters during last con-call. So I guess this should be it. Happy with overall results.
Now that turnaround of Ujjivan and Arman is almost on horizon, hoping that Satin is next. These 3 forms 60% of my hugely concentrated portfolio constructed over last 6-9 months.

(lohiyaakshay08) #336

Analysis by CNBC-

(lohiyaakshay08) #337

Future plans-

(lohiyaakshay08) #338

Interesting Stuffs-

  1. https://twitter.com/BloombergQuint/status/994790920536166408 (Interview with Samit Ghosh)

  2. Antique Brokerage gave target of 490.

  3. Kotak-

(LTInvestor) #339

Do not follow MFI but interested. Can someone help me with a simple question? I see that most MFI earn 10%+ NIM, but regular commercial banks earn 3.5%-4%. So over the long term, by laws of economics, MFI NIM will have to come down unless you believe India will remain an asymmetric market where one section (read: less endowed) can always be charged higher. So, how do you reconcile current earnings and multiples with that? Will earnings margin not come down over the medium to long term?

(phreak) #340

NIM is a function of risk. As long as the inequality (mostly income inequality but not just restricted to that) and cyclicality (rates will vary by sector and type of loan as well within sector) prevails, risk will too. Then there is the case of tenure of loans. The interest rates for short vs long will depend on the interest rate cycle the economy is going through. MFI loans are most short to very-short term which means they need repeat clientele, or a large base of customers. There is a cost to every single disbursement and that is also factored into the NIM because the operating expenses will be high for MFIs in comparison to say HFCs which deal in long-term loans. Even if inequality portion of risk reduces, the cyclicality, tenure and size of loan (Commercial loans are very large sized in comparison) will mean that NIMs will be different for different businesses. This is my layman view - I am no expert.

(Gaurav Agarwal) #341

Yes, they will come down.

We can see the lending rate for both Bharat Financial & Bandhan bank have already come down to 18%.
Free market, competition & demand-supply for good of people. I would love to see this happen as quickly as possible but unfortunately the gap is very big and it might take a very long time.

(LTInvestor) #342

So lets split that up and tackle the cyclicality (sector and types).

Assuming that there are only two types of loans for simplicity (personal and corporate), I agree that personal will be charged more. 15% to buy a washing machine but 8% to build a factory. But MFIs seem to be charging 24-25% for personal loans. The 8-9% differential is purely scarcity premium that they are charging. Else those loans should be 15%. Credit cards charge 24% because it is the last resort for us (more like scarcity of funds so I go to them.)

Bandhan has the highest NIM and guess where they operate, the poorest regions in India (WB, Bihar, Tripura). So can these MFI maintain that premium and for how long. They are more like predatory pay-day lenders in the West. But a pay-day lender can only become that big.

As for inequality, think that is the only reason for success of MFI. Bangladesh being a prime example and pay-day lenders in the US lend to poorer sections. I am not talking from the ethical point, but can a model which is built on continuous inequality sustain. Yes, it can. But can it command a premium multiple like Bandhan does over the long term, I am not sure.

(jajushobhit) #345

If the banks did the task of financial inclusion, by connecting the un-banked population with the formal financial channels, MFIs would never have existed. But this involves effort and will, both of which is missing with the banks. For the poor rural population, the only option without collateral was to borrow from sahukars, mahajans and money lenders which charge as high as 100% rate of interest and also torment them, if they fail to repay on time. For them the terms offered by MFIs are far more comfortable. Though I agree that the NIM are unsustainable and will have to fall, but that will depend on how banks want to expand, by lending to the over-leveraged corporate or to these people who need money and have the will to repay.