Sure everyone has been reading about Financial Inclusion topic of-late; touted to be the next best theme in investing. Being a wide area of implementation, am hoping for thoughts / ideas regarding how this can be played.
Briefly for clarification, Financial Inclusion is broadly how governments allocated money intended for an individual, reaches the individual, securely, effectively and on-time.
Players as a whole are: NBFC, Mobile software (wallets) & hardware (ID devices etc) & implementation, Telecom, Data storage companies.
Was hoping to learn if there are pure-plays available in the market.
Most of the obvious ones are in pvt hands like Oxigen, Paytm etc.
Some are too big to be discovered - TCS, Airtel, Reliance etc who got banking licenses from RBI in Aug 15.
Others are govt owned: India Post, NCPI and seem to have no investment avenue.
India Post is the Ace in this pack - given its ‘moat’ of unbeatable reach to every corner in India - but how does one get a stake here? (It seems to me it is like BEL about 15 or so years ago)
Financial inclusion to me means - Adhar linked mobile payment banks. One stock that comes to my mind is RS Software. It won the contract to develop Unified Payment Interface for RuPay network. Current contract is for proof of concept but at a larger view imagine billions of people using IMPSPlus from RuPay will make RS Software a great company.
Currently the company is moving away from one client based model to client deconcentration which is being reflected in the quarterly. Also, it’s looking out for a M&A of a company that has recurring revenue model.
There is ‘Vakrangee’ - as a play, but having done some initial lookup and combined with other excellent comments (on various threads) from boarders in this forum, the stock does not seem like a good choice.
[For mahesh112 - as explained, Financial Inclusion has been linked to Prime Ministers Jan Dhan Yojana, Aadhar based payment schemes, esp for people in rural locations who are not able to travel miles to collect their pensions from a ‘bank’ - instead, the idea is, the ‘bank’ comes to their houses/villages directly - and once the pensioner is identified securely via a biometric stored against the Aadhar card they posses, the payment is cleared and money is handed over on the spot. Kindly do search and read via your favorite search engine]
Look for Vakrangee, they have white label ATMs and via Govt scheme they are engaged in last mile connectivity for quite a few financial activity. Also they are partners for Amazon, Ricoh, etcIt can be a multibagger in next 2 years, surely will get jump during budget.
[Have put up some key points below; am not sure if the forum allows posting of links; post some links below; but will stand corrected if it is not the norm]
HCL Infosystems maintains the central database for Aadhaar. The company
authenticates the Aadhaar card details sought by banks, telecom
companies and e-commerce application service providers. For every verification, the company would charge a fee.
This is the key cashflow which should benefit HCL Infosystems.
200 trillion biometric matches per day
2 Peta Byte of raw data stored
100 million authentication requests per day
Tera-byte scale data warehouse of 200 million records
50 million messages per day
100 million database transactions per day
Targeting 60 crore Aadhaar enrolments by 2014, agency has issued more than 40.29 crore Aadhaar numbers till August 2013
The above, is a huge scale and HCL Infosystems is scheduled to supply the storage hardware as well as maintenance.
Preliminary indications are HCL Info is turning its bad management around.
Price looks quite reasonable.
Big players in the market are beginning to warm up on this company.
Crude indications the valuation (at ~60 per share) is currently at book value.
Yes, debt is a factor.
Hoping for it to be a turn around story.
I want to take back my suggestion on RS Software. Their Q3 is very bad. The transition from VISA to RuPay is taking longer time than expected. No near term gain from this script seems possible.
But on long term plans, it’s wise to decide only after seeing their M&A activity and client addition. Until then I feel better stay away.
I still standby the quality of the promoter but this risk of loosing visa and client de-concentration should be been anticipated long back.
I will revisit it after seeing good road map from management
