Not really. As I’ve posted before here : SBI Cards & Payment Services Limited
I’ve felt valuations are getting sky high and for them to justify it they had to perform. I’ve made a lot of profit on it already and today I’ve taken out my initial investment and I’m letting my profit run. Il reassess post covid.
My thesis was that they would be immune to covid this quarter onwards… The sharp, sharp rise in GNPAs made me realise I got my thesis wrong and that times are going to be uncertain regards moratorium for them too. I accepted my mistake and acted on it… something I wasn’t sure I would ever be able to do since I tend to fall in love with my companies so this was a big step for me.
Il reassess and maybe come back in with more in a few quarters but I’m going to stay away for now. I still have a lot of shares since it was a very concentrated bet(so I’m still very much invested… it’s just that I now have 5 percent of my portfolio in it compared to 15)
The share price may rise but now I don’t have much confidence in the next few quarters so I’d rather sit on the sidelines and wait.
For them to justify their valuations they need to have got a PAT of double or even triple of what they’ve got along with similar GNPAs as last quarter. I’d kept a target for it since it’s so highly valuated and it fell really short. Honestly feels like daylight robbery that I’ve made a profit off of what I feel was a flawed thesis and assumptions in the short term(long term I am not too worried yet). However, if customers pay them back they’ll actually make more money on interest in the next few quarters. Provisions are higher than they initially thought and ate into PAT so it’s very obvious they’ll perform well in normal times. Right now it’s too much asset quality concerns for me though for the next few quarters.
Overall the performance isn’t worthy of a now 70+ PE financial based company. The market may prove me wrong… But I can’t justify holding huge quantities when I’m not sure what to expect from the next few quarters anymore but il definitely hold on to my remaining shares for the foreseeable since long term I still believe in the credit card story. In normal times I would just hold all my shares and trust the company long term. In covid times things are different and if there’s uncertainty and huge danger of leveraging, npas attached to a sky high valuation then making tough decisions like selling have to be made imo
Note: this isn’t a buy or sell reco to anyone. Everyone’s portfolio is different. In a diversified non concentrated portfolio this could just be a moment to take on the chin and move on.