So you mean …in the interest rate rising scenario, USD will strengthen, inflation will come down (at least in US), money printing will come down as well, and gold will come down with it. Wouldn’t policy easing in Japan and Europe going to effect all this? I am trying to analyze the impact on the yellow metal overall with these forecasted interest rate hikes, as it is definitely going to effect Manappuram loan book despite all the measures mgmt has taken to minimize gold price impact on its business).
Lower circuit tomorrow? and kindly can someone help me in gauging the impact? I see a run on the branch tomorrow.
Thanks
Kanv
As I understand this, the restriction is on CASH disbursement only not on overall loan against gold. All the loan can be disbursed via cheque.
Similar announcement last time on 17.09.2013, a fall of ~20%. Happy Buying!
I do not see any issue. Disbursement above 25000 can be made by cheque or direct transfer to bank.
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These people will have ready-made work around to beat this rule, they may split the single loan to multiple loans of 25K each. Anyway, none is going to audit each and every loan to catch these kind of practices. Any knee jerk reaction from market will be ripe for buying opportunities.
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Reason for 2013 correction is:
"The RBI also said, the loan-to-value (LTV) ratio for loans against jewellery would continue to be at 60%. "
One of the main advantage of NBFC compared to banks is higher LTV. This rule took that away.
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the average ticket size as of last q i rs 30000…and shar eof non cash disbursements is 65 %…i think they will be a knee jerk negative reaction ofcourse but need to see what the management thinks about this move…capping cash at 25k might push some business to the unorganised players who might take higher int rates but are willing to give more amount in cash…so for the borrower the trade off is between lower cash avail plus lower int versus higher cash plus higher int rate. lets see how this pans out…a few shocks to the company in the last few months…first demon and now this.
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But poor either don’t have bank accounts or they don’t know how to use it.
If average ticket size is 30-35000, then this new rule would probably have negligible to minor effect - So a person availing a loan of 50,000 would now take the same amount of loan in names of two persons(say husband and wife, or include his parents…).
One important data point from Q3 Conf call in wake of new rule;
The share of non-cash disbursements increased to 65% in November and 66% in December compared to 53% in October 2016 prior to demonetization
So that means they already have more than 50% disbursements happening in non-cash form!
Further, management has already been taking initiatives to move towards cashless mode as its a long term positive as per them. This new rule will further speeden up this process. Here is the comment from Q3 Conf call
On our part, we intend to continue our campaign to have more of our customers adopt cashless mode because that is where our long-term interest lie. We have seen our Online Gold Loan products which is totally cashless at our end become more popular. OGLnow accounts for nearly 10% of total gold loan collateral up from 6% last quarter. We are also pressing ahead with developing a new age gold based fintech business opportunities.
Link to Q3 FY17 Conf call:
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With rising interest rates in US, inflation may not come down but rather will not go up. US Fed will generally raise interest rates when they anticipate inflation to go up in future.
Each central bank takes its own decision and usually there is trade off between inflation and growth. RBI has officially adopted inflation targeting as a policy directive so in India inflation is taking precedence over growth as RBI believes low inflation will aid growth in the long term.
Gold prices are influenced by a number of factors and money supply and inflation are just some of them. I am not an expert in predicting gold prices so I can’t really comment any more than this.
Lower inflation will definitely cause gold prices to rise less but I don’t see a long term decline in gold prices. Lets not forget that Manappurum is not a jeweler or a gold miner, it is a lender that use gold as a collateral. so to that extent Manappurum is not impacted by small movement in gold prices.
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Good last line conclusion, just that big gold declines can impact its LTV and P&L
With the cash disbursement 20k for gold loan, what will be the impact on the qtrly performance for Manappuram. Seniors plz comment
CNBC-TV 18 tweets 'Manappuram Fin Promoter Looking To Sell Stake In The Company. Promoter Stake Sale To Trigger Open Offer In Manappuram Fin" Does anybody has any info?
spoke to the investor relations co which manages manappuram…he is suggesting that this news is just a rumour…and the co is in the process of sending a clarification to the exchanges.
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Talked to investors dept just now. The concerned person said she hasnt heard anything from the board (board meeting happening today and tomorrow) regarding the stake sale news and can’t confirm whether the news is true or not. They would only get the final word after the meeting and send clarification to the exchange after that.
Well for a rumor it certainly got some coverage - they are saying issue with succession planning as sons and daughters not interested in business. But why would the promoter sell the entire stake??? Definitely a negative if true.
'As Manappuram’s promoter looks to sell stake, stock rises 2%The promoters stake is currently seen at 28.2 percent and some institution have shown interest in buying this stake, sources told CNBC-TV18.'
With ~800cr of annual profits (expected to grow 20% YoY) and 8000cr of Market cap - it is not expensive, rather a value buy. If the selling of stake is true, hopefully they sell to some good strategic investor or existing good player…that will make the story even more sustainable and lead to re-rating to atleast fair valuations.
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how is it cheap exactly? most nbfc’s trade at 2.5-3 times trailing 12 months price to book…manappuram is almost there as well…cannot look at it from a p/e perspective…i agree it is at 8 times fy18 earnings ut then if you were to argue that it should trade at 15 times earnings, then the price to book would jump to 4-5 which is not sustainable…it is a fairly valued stock in my eyes…
what are your thoughts on how we should value it.
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