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?
It’s better to wait for next quarter results to come since it has 10% exposure in karnataka.im expecting a bad results in next quarter. If it fall then I will definitely enterprises that time
Met with Muthoot Management last week,
KTA:
Seems like Ujjivan SFB and Muthoot might come back faster and stronger than others.
Disc: Not invested.
Latest interview of CEO Sadaf Sayeed
Very good set of results posted by company. Company has closed some of the branches which were not performing in the past in Q3. Asset quality is also improving which is reflecting in numbers.
Disc - Invested and biased
Though results have been good , MFI (IGL loan book) AUM has infact de-grown q-o-q seems. Seems management is adopting a cautious approach in growing MFI book. One or two quarters more one has to wait to see growth in MFO loan book which should then lead to growth in NIM and overall PAT as cost of borrowing will also come down by small percentage points.
All the growth is coming from Individual loans and Microlap loans.
Why do you think that Individual Loans(IL) and Micro LAP are not coming under MFI?
I thought these were new products introduced by MFI players few months back. And comes under microfinance loan itself.
In my opinion I don’t see any decrease in MFI AUM. All I can see is change in product mix within microfinance loans.
Correct me if I am wrong.
Here are 3 links to insightful article which might be helpful to someone who want to understand MFI space
They Finally upgraded the AUM guidance to 20% in a recent TV interview given to ET now
Good to see that management hears the feedback.
