Ratnakar Bank (Now RBL Bank) quoting at P/B of 3.47 - Did anybody know of this bank few years back?
LVB quoting at P/B of 1.53
IBHFL quoting at P/B of 1.47
A combined IBHFL+LVB will be a much stronger bank with much larger asset base (almost 2x of RBL), smaller NPA, plus a promoter who is hungry for growth, who is demonstrating leadership in a choppy environment, establishing industry leadership in using technology for driving growth, driving higher ROE by innovative sell down of loan assets, sharing wealth with minority shareholders through best in class dividend payout.
The Value migration from Public sector to Private sector is still a long way to go before reaching maturity. The low penetration of banking services provides a long runway for growth. Sensible management of assets is key to continue growing profitably in India.
The promoters are ambitious to make this one of the finest Indian bank and be counted amongst the top 5 banks in the country.
Trust is everything for a bank. Indiabulls group over the years had a lot of corporate governance issues. Even now their other group companies like Indiabulls ventures and Indiabulls wholesale blatantly looks like operator stocks with lot of price rigging happening. So it would be hard for this group to gain people trust.
It is one thing to combine the best run small finance bank and best run housing finance company into a bigger meaner bank in Bandhan bank. But here itâs a combination of a failed bank which without a bailout will get wiped out with a housing finance company which is going through both credibility and liquidity issues. So we need to be grounded of the expectation of the combined entity.
Few people are aware that Lakshmi Mittal was one of the first investors in Indiabulls group. Indiabulls had an investment in Oaknorth which was started by Rishi Khosla (Lakshmi Mittalâs fund manager at a time). I am not sure if they have disposed of it fully or partially. But Oaknorth is one of the hottest challenger banks in UK right now.
A lot of posts here are making noise about Corporate Governance issues at IBHFL. There was a reason that RBI did not give a banking license to IBHFL back in the day. But, this also made the company aware about what was lacking or needed to be corrected.
If they are in the running for a second time, They would have done their homework better this time around. We better leave the speculation of whether they will get the banking license or not to the RBIâs decision.
But, Shouldnât we be conscious of the fact that both DHFL and IBHFL have been accused by the same identity âVikas Shekharâ who held 4-5 shares both times. Why has nobody found an issue with the fact that IBHFL was quick to respond to the Supreme Court and this Vikas Shekhar guy alongwith Abhay Yadav guy had to withdraw their application?
Disc: Not Invested. This is not a a suggestion to buy/Not buy/Sell.
Do we have any other instances of corporate mis-governance at Indiabulls group, directly related to the promoters of the company? I see that they take disproportionately higher salaries compared to the managements of other HFCs. I want to know more.
Corporate mis-governance at Indiabulls group company:
Year 2017,Indiabulls promoter exploited minority share holders of
Indiabulls real-estate by giving raw deal of buyback from open market at price upto Rs. 90, in which promoter did not participate. The share price was depressed throughout the buy back. The company bought over 5.5 crore shares at average price of Rs.80. Promoter stake went up by 3 % and soon after declared restructuring making the stock to fly 3 times in 4 months ( 80 to 240). Taking advantage of high price promoters reduced their stake, a blatant manipulation of stock price just after the buyback.
In other countries, such reports have brought a companyâs downfall in a matter of months. Valeant (https://citronresearch.com/wp-content/uploads/2015/10/Valeant-Philador-and-RandO-final-a.pdf) was taken after by people such as Bronte capital, Citron and Safakhet capital. Tianhe Chemicals, the once celebrated stock in HK/China was brought down by findings of Anonymous Analytics (https://www.scribd.com/doc/238368088/Tianhe-pdf#download&from_embed). Citron research keeps publishing reports and their accuracy is pretty high. Veritas, I am not too sure, they seem to be more academic and less on the scuttlebutt. But nevertheless, this is definitely not a âcleanâ group.
From Indiabulls Housing Q3 ppt. Total developer loan (DL), ~25k cr. Using the recent One BKC transaction as a benchmark, I expect ~15k cr loans of total DL is from below properties. At 100% PD, and 50% LGD, the loss is capped at 5k cr. Logic defies the market panic!!
IBHF still holds a minority stake in Oak North Bank which is worth ~Rs 3000 crore based on the last deal metrics in Feb 2019 when Softbank came in as an investor.
This thread was started in Jan 2013 (Post Veritas - a pain point for many investors who still find it challenging to invest in IBHFL with the Veritas story background ) when the price was 260. The cumulative dividend paid since then is around 240 and the current price is 600 (reduced by more than 50% from Life time highs). CAGR of around 24%.
At a Life time high of 1400 (Feb 2018), the CAGR works out to as high as 40%.
The letter is dated 28-June-19. A month old and tough to say it will matter much. These allegations have been on going for years now and the group seems to be âseasonedâ to deal with this type of stuff. But yes, this time, looks like they cannot just shrug it off under the disguise of some random blackmailer.
