Why I like Satin:
Background:Satin, Credit Access Grameen, Manappuram (For Ashirwaad ), IIFL (For Samasta) and Spandana Spoorty, Fusion Microfinance are a few of the NBFC MFIs I track. There are more in the market. ( viz Muthoot Microfin), that I do not track.
Microfinance, as understood by me, is a collections game. If you collect well, you have lower credit cost. This leads to more profits, higher book value etc. And the best way to avoid NPAs is to source well. The better MFIs, therefore have systems in place that avoid loans that may turn into NPAs.
Reason 1: What I can make out is that Satin has the best credit cost numbers, not only on Q3 results but previous Q2 and Q1 also.
Reason 2: Further, it is trading at significant discount to its book value.
Reason 3: The MFI shares are beaten down currently owing to the stress in the sector. However, I believe that the MFIs will eventually recover from the stress and valuations will accordingly move upwards. And the better run MFIs will deliver superior returns.
Disclosure: My personal views. Not a buy or sell recommendation.
