Money Matters Financial Services

This may not pass the management test but i like the company

  1. Very high cash and a good govt bond portfolio.

  2. they raised 445 cr at 625 rs per share in 2010 before the LIC bribe scam broke out.

  3. Promoters has increased stake by 5% in last 1 year.

  4. Earlier before the QIP the company was into loan syndication and needed to pay bribes/kickbacks etc which everyone does in one form or the other albeit in a very small way in terms of numbers.

  5. Now the company is into corporate lending and does it on collateral so very low risk of NPAs. As of March 2012 majority of it was in Commercial Real estate around 300 crores fully backed by collateral

  6. Have equity holdings like CARE and Future Capital Holdings

  7. Cash equivalents of almost 170 cr + Bond portfolio + a loan book.

  8. The stock is available at 0.65 times book and i believe should trade atleast 1-1.3 times book.

  9. Above all 93% of shareholding is cornered and one can expect some stake placement in next 1-2 years time.

Above is just a quick analysis will need to look at exact numbers.

Would elicit views from the members

hi Nooresh,
Sold it in december 2012 around 150-ish levels (right before the warrant exercise period).I’m under the impression that at a mkt cap of 525 crore/rs.150 the easy money has already been made.I believe future growth will have to occur to justify paying today’s market price,it very well can especially considering that the de facto promoter is Mr.Rajesh Sharma who was once considered the king of the Indian bond market .The promoter has basically allocated his shareholding of 64% in a HUF structure thereby displaying an apparent alignment of interests with minority shareholders.
The recent postal ballot seeking shareholder approval for raising( presumably) debt seems to be an attempt towards leveraging it’s newfound strength (in operation since 2011) in real estate lending ,a sphere of activity with great potential for returns in the current scenario .
I believe all these factors qualify it atleast as a hold if not a buy.
p.s. in my last convo with the cs they can’t sell the CARE shares atleast till november approx.
i saw the latest shareholding pattern,fii’s hold 10.4% and the HUF structure holds 64% so should’nt the restricted shareholding be 74%?
eager for your comments

Look at the public shareholding as well as the latest announcement

hi ,
saw the full march 2013 disclosure,21% is with corporate bodies(truly silly of me)
p.s. what are your thoughts regarding the growing potential intrinsic value of the company especially with the new 'expansion 'plans?(not sure about the exact terminology for seeking approval for using other ppl’s money is supposed to be)