Very well clarified investor PPT uploaded now by Arman -aggressive provisioning done …
Cumulative Total Provisions stood at ₹ 43.8 Crore as on 30th Sep’20, covering 6.2% of the on book AUM…
my personal opinion is that this is very prudent and makes sense -personally feel that may be one more quarter of provisioning and then it should normalize (provided no second wave) …
Discl -my opinion may be biased because of my holding ,hence please do your own due diligence
I dont know …i dont think even the company will know for sure now( i may be wrong ) .The entire financial space will declare poor results next quarter because the real NPA will start surfacing (after the morat cover is over ).The market is forward looking hence inspite of bad results some of the financial companies share prices will rise -these companies entire yearly PAT of this year may be wiped out but they would emerge stronger and bounce back on growth and PAT next year and so should be share price .Hence we need to be invested in fundamentally strong businesses with ethical management .
Discl :Invested in Financial sectors in Bajaj finance ,Bajaj fin serve ,Muthoot finance ,Arman and CSL and hence my view may be biased bcos of my investment
yes offcourse thats another way of looking at things as there is no right or wrong way -we may not get the share at todays price but if one wants to be very sure wait for next quater and then decide to invest/increase
Promoters are not selling now …its the earlier warrants allotment of 2 years back to Saif partners which got converted ,hence you see dilution (and hence reduction in stake ) . Ideally after one more round of equity dilution (which should take care 2-2.5 years ) ,I think the company need not raise money and grow at pre covid ROE rate (around 25/30% + pa) which itself is good enough .
1)Most of the NBFC (say like Arman ,Credit access etc) are creating provisions for future NPA.Since most were under Moratorium ,the actual NPA’s you will come to know after few quarters . Arman have build provision of 7.2% of AUM till now ,I feel they may further build 1-2 % more in next quarter (I may be wrong )which should be sufficient to cover for the real NPA’s of Covid .
I dont know whether asset quality will be better than all peers or not .I expect Arman ,having provided a years profit , would come up with far better number next year (FY 22 ) .
3)I dont track other MFI NBFC’s but given the experience I had while working in field or from scuttle butt ,I would rate credit access and Arman far better than Spandana with respect to asset quality .
Discl : I am biased because of my holdings in Arman and hence please do your own due diligence
I dont think second wave will deteriorate their performance but full lockdown offcourse creates hindrances, specially ,in collection .Hence according to me Maharashtra lockdown and its extension will impact them( and other MFI’s ) to some extent .The good think is they have provided well .They may provide further by another 1-2% more (my guess ) in Mar qtr also .
How much does this impact Arman financial.
Cash collection is highly impacted in gujarat due to second wave of COVID.
The Reserve Bank of India on May 5, 2021 announced various measures like liquidity support to emergency health services, restructuring framework 2.0 and support to the smaller microfinance companies with asset size less than Rs 500 crore with priority sector lending classification through small finance banks.
According to small NBFCs, they’ve been given a miss altogether in the relief measures announced by the regulator. Raman Agrawal, Director at FIDC said, “Small NBFCs have been grappling with a tight liquidity position for the last 2.5 years. Now again they would land up in a situation where they will have to restructure customer’s loans but no back-up on the liability side.”
