CEEJAY FINANCE LTD - Rural Focused Vehicle Financer

Company : Ceejay Finance Ltd

Listing : BSE Only - Ticker Code 530789

CMP : 129.5

Equity : 3.45 Cr

Market Cap : ~45 Cr

Book Value : 100

PE Ratio : 9.5 (Ind. PE 39)

TTM EPS : 13.55

Promoter Holding : ~59%

Industry / Sector : Finance / NBFC into Retail Loans.

The Company :

Ceejay Finance Ltd (CFL), headquartered in Nadiad, Gujarat and registered as an Asset Finance Company – D NBFC with the Reserve bank of India, is an integrated finance company providing financial services. CFL is a sister company of Ceejay Group, which has been established for over a century and has been a leading player in Retail Finance since 1993, specializing in loans for vehicle (2 Wheelers, 3 Wheelers, 4 Wheelers, Pre-owned vehicle and Commercial Vehicles). With growing business opportunities, the company diversified its finance business to include SME Business Loans, Loan Against Property (LAP), Personal Loans, Micro Finance Loans (Since 2015), and also acting as an Insurance Service provider for Genaral Insurance to the clients.

Business :

The company is currently managing Assets (AUM) of over 500 Crores and has served over 1.2 million clients nationally. The company is having a strong presence in rural, semi-rural, Urban and semi-urban areas, where the company help it clients to secure loans with minimum hassle. The company has direct presence in major cities & towns in Gujarat and Maharashtra. And rest of the area is covered through agents and dealers network spread across the state of Mah & Guj. The company secure the finance from the bank at 12 to 14% and promoter entity at 10 to 12%. ICRA has assigned the company a stable rating of +BB (Stable) for the cash credit limit from the banks. Capital Adequacy Ratio (CAR) of the company stands at a healthy 60%, well above the regulatory minimu of 15%. As on 31st March 2017, the Hypothecation / Mortgage Loan stock stands at 55 Cr as compared to 42 Crore as on 31st March 2016.

Outlook :

With normal monsoon in Gujarat and Maharashtra in the current year, the demand from rural and semi rural areas for the financial products is likely to increase, current data for 2 wheeler sales from rural areas is encouraging. Demand for MFI loans from 10,000 to 20,000 which the company caters to is likely to remain growth area for the company, along with Personal Loan and LAP portfolio. Falling interest rates is likely to help company secure finance at a much lower rates than currently 10 to 14%.

Valuation :

CFL, a continuous dividend paying company for the last 7 years is a BSE listed company with a small equity of Rs 3.45 Cr and promoter holding of 59%, 20% non promoter holding in physical form and 5.3% held by HNI Investor, leaving very less floating stock in the market. For FY 17 the company reported an income of 14.5 Cr and Net Profit of 4.68 Cr giving an EPS of Rs 13.56, for FY 18, the company is likely to grow its topline by 15% and bottomline by 25% due to reduction in cost of fund and growth in disbursement, the expected EPS of Rs 17, the stock is trading at a PE of just 7.6 times, Current Price to book value is 1.3 times only (Industry PE & P/B stands at 39 & 2.5 to 4 times. Muthoot Capital Ltd., is in the same business and its valued at 24 P/E and Price to Book of 4 times.), ROE & ROCE is 13.29% & 21.94%, Debt to Equity Ratio is 0.60 only.

In the last 10 years, the company has achieved Compounded Sales Growth of 8.48% and Compounded Profit Growth of 13.5%, Trailing Twelve month Sales Growth & Profit Growth is 18% and 28%, which indicates the company is on a high growth trajectory. If the company is valued even at 50% discount to its peers in terms of P/E and Price to Book value, stock price should easily more than double from current levels, thus making CFL a investment candidate for long term wealth creation.

Risk Factor : Auto Manufacturer getting into vehicle financing may hurt the business of the company. Company is doing business in Gujarat and Maharashtra only. Company is securing finance from promoters and banks at high rate of interest currently. Being a micro cap company, not much details are disclosed in the annual report or their website.

Disclosure : I got shares at 120 recently and is less than 5% of portfolio.



What is the impact of this ?

This company is related to politician Praful Patel. Check holdings.

What is the asset quality of the company? For a smallish company or infact any financial company gross and net NPA and provision coverage are important data points which I dont find in the write up.


The asset quality for CFL worsened with the GNPA% increasing from 4.56% as on Mar-15 to 5.64% as on Dec-15. The NNPA% during the same period increased from 3.60% from 3.99%. This may be because of poor monsoon during that period.

The company currently follows a 180+ dpd NPA recognition norm and thus the asset quality could be expected to face downward pressure as the company moves to a tighter NPA recognition norm.

Now it’s not normal rain in Gujarat. It’s majorly like a flood and disaster in many parts. So rural economy would not be that good as it was expected atleast in Gujarat.


Good result. June quarter has always been weak in the past. But this time company has posted very good numbers.


Annual_Report.pdf (2.2 MB)

Annual Report for 2016-17.


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Two-wheeler makers, too, are reporting strong volumes during Navratri on prospects of a robust rural economy, underpinned by good monsoon rain.
Honda Motorcycle & Scooter India senior vice-president, sales and marketing, YS Guleria, said sales increased more than 30 per cent , as higher capacity increased the availability of the company’s products.

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Meanwhile, with growth in rural markets returning, it was a season of strong sales for Hero MotoCorp Ltd, which draws close to half its sales from the region. An official at the firm, who declined to be identified, said the company sold a record 300,000 two-wheelers on Dhanteras. The official claimed it’s the highest volume sold by any firm on a single day anywhere in the world.

Officials at Bajaj Auto Ltd and Honda Motorcycle and Scooters India said the companies will share their Dhanteras sales numbers later in the month.

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September 2017 result f5eeac54-c2b0-479c-96bf-9b18e89afafd.pdf (230.4 KB)

Good result by Muthoot Capital should have a rub off effect on CFL. Muthoot Cap trading above 35 PE and CFL trading at less than half valuation . Good December quarter expected from CFL.

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