Since the discount in fresh shares is substantial, we can safely say that the price of the share will fall on the ex-rightsissue date.
< 2 p/b
With fy 16 BV could be around 410, with 2.5p/b it could be 1050, despite adjusting rights ratios. I think this is what mkt has realised off late, it may lead to huge rerating.
I think the main reason is for 1000 cr mcap, 300 cr rights issue of pretty big, that too at a significant premium to BV. This is leading to this huge re rating.
Someone from fin background can post a detailed calculations. Obviously we are missing Hitesh bhai for his simplistic wisdom !
Issue price and ratio is bit of disappointment. Stock price until end of December was about upper 450 towards 500, so where is the discount? Is there a guideline how rights price is decided? I was hoping they will do 1:2 at Rs 350.
found this on moneycontrol.com messages (my broker says tht the subscription form will be emailed to you apart from the physical copy which u will receive at your house)
"last date to purchase with rights is Friday January 23 as the record date is tuesday january 27.
you will get a form by registered /speed post and will have following options to act:
(1) apply whole quantity offered as per your eligibility
(2) apply additional quantity which is subject to subscription level.
(3) apply part quantity and renounce balance either in market (rights will be listed but hardly any broker trade) or to somebody at a price.for this you have to request a split form from company before schedule date.
(4) renounce whole from.
(5) do not apply .
this will be a physical process and you need to attach a cheque or draft of payable amount with the form ."
Finally the much awaited rights
issue details are out.
According to mgt guidance, they
ll grow loan book at 30-35% post this & won't need capital till FY17 end
after the issue (This seems right from my analysis also).
Sep-14
After rights
Fy13
Fy14
Fy15
Fy16
Fy17
Net Worth
489
766
802
902
1031
Shares out
2.05
2.66
2.66
2.66
2.66
BV
239
287
301
339
387
BV growth
12%
14%
total Assets
7042
4016
5844
8300
10790
14027
growth
42%
30%
30%
ROA
1.3
1.5%
1.3
1.3
1.3
PAT
91.546
75.71
92
124
161
Div
18
25
32
Retained
74
99
129
o Assumed mgt
guidance for FY15 loan book & 30% growth in FY16 & 17.
o Assumed 1.3% ROA
& 20% div payout --- ROA may improve on rate cut
o Based on current
ratio of Loan Book to Net worth, they can reach to loan book near 15,000 cr
without need of more capital & they ll reach that figure in FY18
Based on these assumptions, I am getting BV at 387/- for FY17 end.
PAT growth is looking great at 30% cagr; however, Book value growth
looks mediocre at 12-14% only!!
Little unsure what will stock price follow - Profit growth (30% cagr) OR
Book value growth (12-15% cagr)!!!
We would like to inform you thatif you are holding the shares in your demataccount as on record date of Right Issue then the application form would be forwarded directly from the concerned RTA to your registered mailing address.
Does this mean that purchases can be done only after 27th, as 27th will be the date for identifying the eligible shareholders to whom the applications will be sent by mail? Sending application forms by mail through out the country by 23rd Jan looks too aggressive to me.
@Gyan- True. If those things happen, then there will be huge upside.
@All- Regarding rights issue date, Jan 27 is record date. Jan 23 is ex-date means you will be eligible for rights if you hold shares on Jan 23.
After Jan 23, they will start sending rights doc to everyoneâs address. And all interested shareholders need to fill that form & submit it to their registrar by a given date (which will be given in that form).
Jatinâs post makes sense. They should start sending forms on and after the record date. And on the next day, share will become ex-rights. Which means that even if one sells his/her shares a day after the record date, one will be eligible for the getting the fresh shares @450 since he/she held the shares on the record date.
If one were to buy canfin at current prices of around 625, and opt for rights his avg cost for shares post rights issues works out to around 585 per share. (10x625 =6250 plus 450x3 =1350 and the total cost of 13 shares would be 7600 and that divided by 13 works out to 585)
BV post rights issue i.e for fy 15 should be above 300.
Compare canfin with other stocks like gic hsg (BV 123, price 275, quoting at 2,2 times book) repco HF quoting at more than 5 times book and so on.
Canfin is as mentioned by Mr Ilango is likely to grow at 30% cagr for next 2-3 years. So at less than 2 times book, I think canfin could be an attractive bet for next 2-3 years.
Thanks Hitesh bhaifor your comments and HNY, we missed you and welcome back !
My rational was also the same, even if one gives 2.5 times P/b ( which even GIC housing is trading, with higher NPAs, although itis/was your favourite as well, now Pobrai also holds), with 310 BV fy 15, prices comes as 775, which is 32% return from 585 ex rights price.
Secondly Fy16 BV could be close to 375 ( ?), so doing 2.5 will lead to 937 Rs, which is 60 % higher, post march stock will strat trading of fy16 forward p/b multiples.
With RBI rate cut, housing budgets etc, this stock is having all the rightingredients for 50-60 % gain in 1 year.
@Jatin: Since,this is a market looking at good domestic betsâŚNBFCs are right up there.In an NBFC,you would like to see:
Some strong niche/franchise
Control on Loan book quality(NPAs)
Spreads/NIMsâŚand their direction in the coming yers
Management quality
Loan book/earnings growth
And of course,Valuations!
As Hitesh bhai mentioned,CFH still looks good from CMP.This is quiet amazing,since even after a 4-5x rise,the stock can invite new buyers.In a market,looking for growth stories with qualityâŚCFH will score high.I wonât be surprised,if the stock delivers strong returns in CY2015 too.My sense is,markets will focus more on earnings growth rather than BV growth.
There was a time when this was selling Below Book but still there were people who were questioning its potential. Financial stocks were not in favor then.
Now at 2x Book, most people are bullish!!!
Rightly put by Sagar- Quiet amazing how even after a 4-5x rise a stock can invite new buyers!!!
I agree with Hitesh & Sagar- Looks good relatively (compared to LIC & GIC) over a 2-3 year period.
However, I am not very sure about absolute attractiveness at current valuations (but that is true for most other stocks also).
@JK, Most people look for consistency in growth before assigning higher multiples to a company. Considering that company was doing absolutely nothing till 2011( No growth in 5 preceding years), many participants were not convinced when the stock started turning around. It took some years of consistent performance from the company side to convince people that it is not a flash in the pan.
For a company growing consistently at 30%, with decent ROA and asset quality, even 2x book is cheap. You donât have to look any further than Gruh and Repco(I am not suggesting that Canfin is of the same quality).
The thing that concerns me is, its a govt company and will work like one, the rights issue demonstrated it, any non govt company would have done it in 1/3rd of the time (agree market treats and pays for what it is). Not to mention my own experience when I approached CanFin for loan when I bought a home in Bangalore last year.Can it really get over its culture? and be modern/efficient in working and customer service? Market is out there⌠like I had earlier mentioned Bangalore itself is a huge market for itâŚ
Has anybody done kinda scuttlebutt and survey how does it compare to Gruh/Axis/Dewan/Repcoin customer service? The developer where I bought villa keptadvising me to go with Axis Bank however I ended up with SBI.
This may not be right place to ask this question but Iâm not sure where else to post.
I contacted broker regarding right issues form. They said they will post form to my registered address with broker. But as I do not stay in that city now, i asked whether they can email form. They said they canât email and I will have to contact Canfin R&T agent.
I am not sure what to do whether I should exit before rights issue record date and then buy after price is adjusted with new shares or is there any other way I can subscribe to rights.
Iâm in the same boat. My broker has advised that I will get an email to my registered mail id and I will be able to apply for the rights issue.
However, it will be great to hear from the experienced boarders here if anyone has applied for rights issue previously/knows how it will work. Also, it will be a help if fellow shareholders can advise here once they start receiving intimations of the rights issue. thanks.
