UBS has been doing a commendable job. They had been consistently raising red flag against Yes Bank.
They were first to flag Axis bank’s NPA about corporate exposure when street was in denial and Axis was considered at par with Kotak and HDFC.
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I have wasted too much time on these theories of base rates etc etc . Its total bullshit basically if you understand this industry (circle of competence ) you can really make money and others keep talking about base rates , probability and trying to fix their minds with some random formulas and relying too much on them.
The Industry is growing and is cycle and prune to shocks and that is best time to buy these comapnies which are run by very able management and you buy the best financial companies . This sector has very long run way and high growth rates. You need pick winners and stay invested with them. Rest of people who dont study these sector welll will keep making noise during down cycles .
People made money in bad names also like ICICI ,Axis even DHFL
Good investors read , learn , adapt ,make mistake and move forward and make money rest keep preaching complex probabality etc then they overpay companies giving examples of moats etc ( btw i went through most of purcase buffet made he never never paid more like 10 to 15 times etc high side also sometimes during depressed earnings ).
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Hi @phreakv6
What you have written is logical, however do you have numbers behind this, I mean “base-rates” to check the hypothesis that this industry in inherently risky to be avoided? As happens in any industry, ratio of really successful companies to all the companies present in that industry would be very small, there is nothing new for NBFC or financial sector.
Once we have numbers, we may compare it with adjacent industry or other industry, to know if we should avoid this industry as a whole.
Thanks.
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The promoter holding has reduced to 46%
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I think it’s due to the qip of 5000cr which they did it and all CCD are now converted to equity shares which will cause the dilution on promoter side
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This should be a positive for PEL. The large Lodha exposure has been an overhang on the stock. In all past investor calls, the management had sounded extremely confident of this exposure not turning bad. What needs to be seen is if this has been sold at an haircut. If yes, how much?
Discl: Holding this stock, adding on dips
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Its definetly a hair cut, only question is how steep is it. Would this be an NPA on Piramal’s book or a write-off ?
As an Nbfc if you can not forsee your risk speaks very low of risk perception and assertion. Hair cut is a loss in profit margin or even can cut deeper.
Why do you think this is a haircut ? They have specifically said that they don’t expect any write offs or haircut from the Lodha exposure… intact Lodha has been prepaying principal amount to Piramal. They have “offloaded” the loans - should have got the whole principle back in my opinion.
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What would be the incentive for the counter party to take a portfolio of an assets that has been downgraded by a rating agency. I am assuming they would have got it at some discount. Hence the haircut. But even if Piramal were to get back the principal and not get any interest on it, would the interest lost or waived off , be deemed as a haircut.
I have very little knowledge of industry, try to understand from the folks in the forum. Apologies if the questions and answers are naive.
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Agree. There has to be some sort of discount or benefit the buyer would have received for taking up a loan that the market is not willing to touch. And GS is known for making bargains for itself (the only exception being probably the deal they did with Warren Buffet after the Lehman crisis, which they did on Warren’s terms)… hence the question is about how deep is the haircut or loss or whatever name that we describe it rather than a if.
Disc: Held a tracking position. Exited it and interested to re-enter as I am bullish on the management and their vision.
LIC acquired 2.08% stake during the period 21/2/19 to 29/5/19 raising their stake to 6.73%
https://www.bseindia.com/stock-share-price/disclosures/sast/500302/
Very true. Many of the projects the REITs have lended to are stuck.
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The trouble in the NBFC sector has completely exposed him and chipped away whatever halo is left. First he started with holier than thou attitude , then went along with the industry in pleading for help. He also started cutting exposure in Lodha just because the market did not like it. Now some more gibberish about absorbing private losses by RBI. It seems most of his actions are guided by the trend in its own market cap. In comparison promoters of many NBFCs remained calm (Edel, Manappram in my PF) and handled the media and the macro landscape with maturity.
Disc: No holding
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By that logic SEBI should fund every investor at least 10% of money lost in market.
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He also said in that interview, his firm brought down exposure to Lodha Developer, as the market was nervous about it. It means he only do what market likes which is pretty inline with his appeal few months back to Sebi to stop shorting PEL’s shares.
PEL, IBHFL,DHFL, Yes Bank are playing with the loopholes in the regulation of SEBI,RBI,NHB by providing loans to risky developers .
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I feel Mr.Piramal got higher credit than he deserved when price was soaring up almost like an Indian Buffet kind of praise and he is getting a bad rep more than he deserves when the price is falling down. The company has excellent controls and compared to the kind of sector it operates in , it has exceptional NPA levels comparable to that of a retail bank
I do see he is rattled with the fall, but i am sure with all his experience he can dust it off. Piramal took a bet on a very unique sector and has definitely learn’t some lessons. It is a good that this correction scenario busted some of their over confidence bubble and that is a good thing . I am sure they will put better controls and take a reasonably conscious calls hence forth.
At a price of 2000 and an attractive PBV i am taking it
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