Talks of possible merger between AB sun life and Max Life… cannot validate & certify the below source (thriveglobal). Could this deal be a game changer for AB Capital?
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Result summary. 8% rise in consolidated revenue year on year. 37% rise in PAT year on year.
Lending book grew 4% yoy to 60477cr.
Insurance gross premium grew to 1716cr.
Asset Management PAT grew 40‰ yoy
Experts, Is this a good result considering the exposure to all the defaulter firms like Zee, Dhfl, indiabulls etc?
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This company posts excellent results YOY, QOQ but sadly there is no price action. I hope some experienced members may be able to enlighten.I believe that this company can be a good candidate for demerger.
Wait, AB Capital is dragged because of 2 reasons, one Idea which is is really bad shape and hidden NPA in AMC and life insurance arm. Same situation like reliance capital
Is that the reason.From what is understand and i need to double check the figure in their reports,the NPA is minimal.
Gross NPA 1.39% excluding ILFS.
ILFS exposure is about 950 crore which turned in to green.
In my opinion, AB Capital has been dragged down coz of multiple reasons/perceptions (1) Being a group company of Vodafone Idea, if at all the telecom firm defaulted, it would affect the ability of AB Capital. There are lenders whose norms don’t allow lending to firms who have had one of their group companies default. Not that Idea has defaulted in any ways till now, but the fear/threat remains in the minds of the investor (2) Fears of asset quality issues cropping up in 2 of their books: construction finance (part of mid and large corporate lending book) and loan against shares (part of retail lending book).
Inability to raise funds puts a question mark on growth for NBFCs. Besides, with a severe deterioration in the asset quality of the books of several of its peers, investors’ perceive a similar risk emanating from the AB Capital’s exposure to real estate.
However, yesterdays result, post result conference call and the investor presentation kind of puts all of these concerns to rest, in my opinion. That the stock found continuous resistance at 85 levels, imply that the market didn’t have any great expectations from the results. With the results being much better than expected, 85 levels (earlier resistance) should now act as a support.
Disc: Initiated small testing positions in the stock
NPAs cant be in an investment book, is only possible in a loan book. Both, the AMC as well as insurance arm, are NOT lenders and thereby do not carry any NPA scare. In that sense, the business model is very different to that of Reliance Capital.
Trust that helps.
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Thanks padi that was helpful.
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Need to find out if there are inter corporate deposits
I feel Ab Capital was dragged down due to things like
- Idea/Telecom issue - I do not think Idea would default, being apart of the Grasim group and Vodafone also involved - Bharti, Vodafone and Jio are here to stay. But Lets see
- Regular Equity dilution resulted in EPS not increasing - Not sure about last 2 quarters but before this was an issue
- Life Insurance arm growth was not that good - that is until this quarter and in this quarter it looks good
- AMC growth and profitability was not that significant part of overall pie - Now from this quarter, the contribution of AMC looks significant.
Health Insurance and Reinsurance are still small although Health Insurance growth is good (in line with other players also)
Also, someone pointed about the holding discount. I think holding discount would come into picture only when the subsidiaries are listed but in this case, as also in case like L&T Finance Holdings, the subsidiaries are not listed…therefore there may be a no-price discovery discount but holding company discount should not be a case. Pls correct me if wrong.
Disc: Part of core portfolio. Evaluating initial rationale to invest
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My views of 85 levels acting as a support level proves to be wrong. The stock direction, in the immediate term, seems to be co-related more to that of Voda-Idea. With the Vodafone CEO hinting, a couple of days back, at Voda-Idea probably going into liquidation and DoT today asking the telcos to submit their dues within 3 months, Voda-Idea seems to be under immense pressure, with the stock losing almost 17% today, hitting new lows, possibly dragging AB Capital with it.
Reading material on Voda-Idea:
India business faces collapse: Vodafone CEO
have they given any details on this issue in investor meeting ?how much exposure do they have in distressed asset if any idea.thanks.
Its a strong candidate for listing I believe.Thats how HDFC & ICICI did,isnt it.
As per the conference call details their exposure to Birla Group companies is less that 1 %
do you mean vod-idea debt?
As per their latest quarterly investor presentation: Stage-3 gross book for NBFC at 1.39% (Ex-IL&FS) and after the ECL provisioning of 0.48% the Stage-3 net book is at 0.91%, HFC at 0.85%
Thanks PADI
I believe its not substantial enough then…Hope ILFS part is also small.It would be great to see some price action in this stock.