The downgrade of Fusion finance could be a incredible opportunity for Muthoot Micro finance to shine. Fusion finance could see a rating downgrade, challenges in getting loans from banks which leads to decreased forward lending, and an elevated field staff attrition.
This is going to help substantially safe NBFCs with good promoter pedigree such as Muthoot MicroFin and Access Gramin.
Read the latest concall and have the feeling that Management is also taking the karnataka MFI ordinance very seriously and preparing for worst if collection efficiency drops in karnataka post MFI ordinance. Initially they are saying that it is good for them as they are regulated entity and this ordinance will curb the unregulated local lenders, but as concall proceeds, fears of dropping collection efficiency also aroses.
On disbursement front, they are taking very calibrated approach. Infact disbursement got reduced Q/Q basis.
On employee attrition front, they have taken very good steps and brought the attrition within 30%, When other competitors are facing 50%.
Overall, uncertainty still prevails and management is tightening their belts to fight for the worst.
Sometimes, uncertainty brings so much fearfulness in mind , that it became very difficult to put your hard earn money. But then the gut feelings says, big money can be made only during investing in times of uncertainty. Certainty always comes with cost.
Disclaimer: Have tracking position.
What are your thoughts guys, Currently it is trading at much cheaper rate, less than half price of IPO. I feel the promoters are too experienced to let this kind of crisis make them vulnerable? Should we add more at this point or wait?
