This is what is given in the AR
Focus on stakeholder value creation: IBHFL has
distributed dividends of over 9,600 crore of which 6,953 crore has been distributed over last five years. The
company is amongst the top-15 dividend paying private
companies in India.
Now what if 0 dividend was paid or 50% (3500cr) paid.
Can someone share how the balance sheet would have changed and will the fundamentals look better?
Is the FY19 annual report out?
I donāt think NBFCs are allowed to buyback because of SEBI rules. So the only way to reward shareholders is dividends. This was precisely the reason why L&T buy back was cancelled
This is FY17-18 report. You can add 3000cr extra dividend for the FY19 I guess
Agree 100% with what you say. BUT my only point is this : If its such a no brainer idea, WHAT is the market missing here? I get all the liquidity issues, fear sentiment, etc etc but at 5.5x PE, 1.4x book value and 7%+ div yield this is a screaming buy on paper. Then why is it being dumped in such humongous quantities? Again, i agree with your thesis. Those are the very reasons why i am invested in the stock but its always good to ask these questions if weāre missing something obvious.
Markets can remain inefficient (and hence provide opportunities like this) but can this be one of those stocks that remain cheap for years on end? The issue as i see it is that the stock falls big on the slightest of rumors. Milkmen filing nonsensical petitions , whatsapp, twitter rumors etc. Something likethis cant happen with a Kotak or HDFC. So what are these fears? Hidden NPAs i guess or more?
Disc: Invested at 650.
Do short sellers make merry in a bear market by pumping down vulnerable stocks? Absolutely
Do you think Piramal Enterprise will go under? This also has been hammered out of shape.
Are only 3-4 NBFCās going to survive this onslaught? Not at all
Can any economy survive let alone grow without the life line of liquidity provided by financial institutions? Impossible
Those surviving would emerge stronger and wiser out of the crisis.
The stronger NBFCās and their promoters are probably less worried than the investors who are running helter skelter
I think many of your points stem out of hope which is fine if it plays out. Why do you think some of lost market share will be regained by IBHF when stalwarts like HDFC, SBI and many other exists? I think the point to be noted is not if the liquidity crisis will resolve or not. Of course it will! but thing to ponder here is, How long they can survive the liquidity crisis if it has to extend? can we trust their numbers off the back of corp gov issues? of course none of the issues have been proven till now. Agreed they have been trying for merging with bank but if they are so sure of liquidity then why do they need merger? Isnāt deposit taking ānon coreā business for them?
In simple word Now it became high risk high return bet with slightly positive risk reward ratioā¦
My sense is sameer gehlaut will recover from all this stuffs with clean cheat by RBI alsoā¦
Disc.:- Not invested nor planning
Come to think of it, perhaps the only people who should have problems with the high dividend ratio are the debt holders, since while theoretically they should have the first claims on the business, here the equity holders are in effect (partially) jumping the queue through dividends. Not to mention the company resources going to the taxman through DDT.
Not that Indiabulls is the only NBFC paying dividends, but I believe it is the highest payout entity. It would be interesting to see if the dividend policy continues if the stress extends for a few quarters more.
Disc: Not invested
Is it possible that the whole drama was created because promotors wants to increase their holding at possible lowest price and they r confidence about LVB merger will gets approval feom rbi?
What promotors loosing from this whole caosā¦
?Nothing
Does RBI reject this proposal due to this drama ?
Not likely
If it gets rbi approval than what could be value of this enterprise i guess equivalant to kotak bank more or less 2 3 years laterā¦
My sense is it will be a huge conglomerant within next five yearā¦
Disc.:- Not invested
So basically, the promoters donāt see minority shareholders as business partners, but as competitors. That is, the promoters see nothing wrong in taking away the profit share of minority shareholders. That is exactly the kind of promoters who would not find it wrong to siphon away funds from company to their own accounts. I would certainly not want to be long term investor with such promoters, though it can be a good trading opportunity for traders.
I think thatās not accurate as by law promoter canāt increase stake if they get approval in the bank and he may actually have to eventually sell more stake to comply with the RBI promoter guidelines of 20% (or 10% - I donāt recall exact threshold)
Any reporting on the exchanges of this purchasing done by the promoters?
NBFCās and HFCās are facing increasing reduced borrowing bandwidth from Banks and Mutual Funds driven by regulatory actions. They will have to find newer sources of funds to continue to grow their business.
Takeover of LVB opens up a new stream of low cost borrowing capability for IBHFL. This not only provides tremendous competitive advantage to IBHFL but also further diversifies its borrowing profile. While many competitors in the industry would face borrowing headwinds to grow their business, IBHFL is strategically creating new tailwinds for its business. The outcome of this decision would only be known few years down the line in hindsight, but IBHFL is proactively shaping the industry and its own destiny speaks a lot about the management bandwidth.
These kind of conspiracy theories make no sense whatsoever. Sameer Gehlaut just cashed Rs 2800 crore officially through the sale of IBulls Real Estate. Part of that money was used to retire pledges created on IBHF stock for loans taken from YES Bank. This is publicly disclosed info. No management would ever do the kind of antics that you are alleging and play with the stock price in this fashion. When their stakes are worth hundreds/thousands of crores, why would they play about for small amounts? While their corporate governance could surely do with some improvements in the perceived image (2012 allegations by Veritas were dismissed by courts but it still remains a talking point), to think that promoters had any hand in this is preposterous to say the least.
Disc : Invested at 650
Agreed. But just a word of caution. Thereās still some uncertainties as to how the risk weighting for IBHF loans gets done if and when they get the LVB merger go ahead. While not impossible, its not as straightforward to transform from a HFC to a bank overnight. The process will have some hiccups and a transition time till it becomes a smoothly functioning engine. Could take a few Qs at the very least after the merger. If history is any guide, they should be able to integrate quickly and ramp up fast thereafter. The other question is also about public perception. IBHF is currently not a deposit taking (FD) institution and hence doesnāt have a public presence like other existing banks. Might take time to build up that brand and trust with average depositors.
Disc : Invested at 650
I remember few years back Reliance pretroeum Limited(RPL) was traded at 100 and chevron holds 5% stake.
Story started that chevron will increase its stake and share reach 270 levels and then reliance petroleum trust offloaded shares worth 5000cr 35 PIL filled and 100s of complaints registered UPA govt finned mukes ambani 50lacs .
Sameer gehlaut can do anything.
Mark my words IBHF will defenitely gets approval of merger and within 4 5 years it will be huge conglomerant
What does poor corporate governance standards in Reliance have to do with Indiabulls?
It would be helpful if you share instances of mismanagement in Indiabulls group instead.
Disc: I am not invested as I am not sure about Indiabulls groupās integrity, but I donāt have any concrete evidence against them either.
