See my only concern is promoters integrity I don’t found any issue but I am not aware with the promoters general mentality.
Incase of mas financial and armaan financial I am personally aware with promoters integrity and inshort they are like Uday kotak.!,
It will be very helpful if some can Share some insights on that node??
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Yes, indeed the other option was MAS, of comparable scale but not exactly MFI, it too has excellent repute like CAG, and has run up fast. I too was bit doubtful, but maybe that is why the cheapness. I see the board has impressive strength, with 3-4 PE nominees and some industry bigwigs, also the business speaks for itself, growing for so long.
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Spandana results:
Already their March results were better, 10% YoY up on PAT basis.
June mostly matched CreditAccess, PAT is 33% down YoY.
So overall doing much better, and they state that mostly there are not much issues in the biz.
Historically their NPA is almost zero.
If I am not wrong impairment losses at 108cr .
If u add that figure to topline than it could be 168cr or something!!
What is " net gain on fair value change"?
Disc. Invested (rs 645levels)
Added Spandana around 580. Their business model is quite interesting and finding at such a cheap valuation compared to other MFI was the trigger. India still being a predominantly rural agrarian economy, these MFIs have a huge role to play in building wealth both for shareholders and the enterprising rural population. Though the CEO doesn’t sound to be a Uday Kotak, the way she runs her business to the grassroots level is commendable. As with any other business, there are risks, but at this valuation i find downside very limited in case of a meltdown in markets. Thanks to Vikas, it was great looking into the company and boarding the train for this long journey. (On a lighter note, was a co passenger for Aarti Drugs which I exited around 3k)
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UPDATE:
Sold off Black Rose, converted to Alembic Pharm.
Reasoning:
Black Rose is priced right, risk of commodity oversupply is always there, especially as the use for oil extraction demand will be low, the huge capacity might be too much for the market. There was slight miscalculation also, as quantity wise growth is huge but the majority is of a much cheaper product line.
Alembic is simply well researched, that too by Hitesh bhai, and only risk in short term maybe delay in USFDA inspection for new facilities.
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I also added alembic near 1003 and reason behind is same u quoted …
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Dear Vikas,
Thanks for sharing your ideas here. Any thoughts on Deepak Nitrite? Any idea why it is at lower valuations compared to other specialty chemicals? Any plans to add it to your portfolio?
Thanks in advance,
Anto
Hi Anto,
Thanks! I have traded Deepak Nitrite once, but did not have the conviction to hold, longer than a couple of months. Simply put, there are many great companies, with good macros and good management and hence stable, long term plays, Deepak looks like it fits this bill. But the valuation of Deepak looks skewed to me due to DASDA, and such commodity hits/misses are bound to happen. Do not think they can show growth in bottomline to match valuation for the short term, about a year or so, for the price to be attractive for entry.
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Thanks for sharing your thoughts on Deepak Nitrite. Any possibility of re-entering/reconsidering associated alcohol?
Seems a decent buy, maybe on dips, seems results should be bad for the june quarter. I exited because of general derating of small caps and the question mark on promoter integrity. Risk though is that there is no capacity expansion visible, so growth can be missing.
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ICICI securities come up with research report on spandana sphoorty financial I request you to just go through it.
They are predicting 500 crore profit by 2022. Which translate into any EPS of 88 rupees.
I am personally feeling another round of side ways will start for nbfc sector. But my perception towards microfinance is extremely positive because of the current pandemic has nothing to do with villages.
Rural economy is very less affected by the current pandemic, if you understand the financial situation of the borrower of the microfinance institutions it has not change by more than 10%.
In some cases actually they are earning well after Corona because outsider labour has gone and government has given many reliefs for poor people,
At macro level Arman finance ,spandana sphoorty, creditaccess grameen, mas financials and somewhere Bandhan Bank getting stronger than ever before.
Disc. :- Invested in Arman financial and spandana sphoorty.
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UPDATE:
Sold-off Alembic Pharma, transferred into Pokarna (biggest chunk), Gujarat Themis, Spandana (tiny bit).
Reasoning:
Consolidation, target is to keep only a dozen holdings, Alembic was one among the smallest and had low losses, so it drew the short straw.
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Sir
I request you to keep eye on it because it has a Huge pipeline pending for USFDA.
AND THE LIST OF APPROVED DRUG IS ALSO BIG. MOREOVER THE FUTURE IS EXTREMELY BRIGHT, PROMOTER GROUP IS 120 YEAR.
So in future it will get re-rated and over a period of time it will emerge as a MNC pharmaceutical company and it will fetch valuations currently MNC companies are getting.
I could be wrong but my current prediction says in next 4-5 years is a golden years for APL,. For more details you can read the relevant thread and specially replies from honorable Dr Hitesh Patel.
Disc . Invested in APL.
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I don’t understand Microfinance sector much so asking this . Could you please explain a bit about Spandana business model. I was invested in MAS but sold as I find it expensive currently as compared to Spandana. How ethical are promoters of Spandana and any useful info anyone can provide will be highly appreciated as I want to understand this stock and sector.
MAS is a really respected company, hence valuations are higher. Vehicle finance is an easy play. Like AU bank. Cheaper spectrum like 2/3 wheeler has bigger margins. Maybe this market will be big hit in next few quarters.
Microfin is likely explained here:
I have not followed it in detail. It is like Bajaj Fin, pent up demand for finance with good recovery rates. Banks do not reach the lower spectrum and margins are good, but lately market is getting crowded. Though as economy recovers/becomes 5 trillion takas, hopefully some benefits will spread.
Spandana has survived two big blows and is among the top 2-3 by size in this sector, and their metrics are simply amazing. This one is going to be with me for few years looks like.
The problem for sometime, maybe till year end will be lack of fresh loan issues. So growth will come down for FY21. This can pick up only after 1-2 more quarters, though agriculture is showing good growth so it might be earlier.
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Sir pokarna biggest chunk of portfolio? how much percentage of total portfolio now?
Laurus is biggest at 24%, Pokarna second 9% (and that is enough!), Granules, Solara 8%, IOLCP 7%…and so on. Laurus has grown so others appear smaller % wise…these figures are all at their present value (not the invested value).
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Thank you sir for sharing the information and valuable ideas
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