Latha & Sonia entice but Basant stays firm on vow
Latha Venkatesh, the veteran journalist with CNBC TV-18, and Sonia Shenoy, her charming junior colleague, have a vast repertoire of tricks that they use to coax recalcitrant guests to be stock specific and offer stock recommendations.
The duo knows that novice investors like you and me have an insatiable craving for stock recommendations. We stay glued to TV for hours in the forlorn hope that some eminent luminary will reward us with multibagger stock recommendations.
“Why don’t you give us something that is out of the ordinary and something that viewers, retail investors can look forward to in the New Year?,” Sonia Shenoy pleaded with Basant Maheshwari in her sweet voice, even as Latha looked on expectantly.
However, Basant dashed all hopes. “I can’t disclose names” he said obstinately.
We can’t blame Basant for his obstinacy because he has taken a vow never to offer stock recommendations to novice investors after the bitter experience he had with the Hawkins recommendation.
@safety2304 Have done that before and also seen the consequences of it.
— Basant Maheshwari (@BMTheEquityDesk) May 31, 2016
Adverse impact of note-bandi will be short-lived
We have to compliment Basant because while we have been lazing in the comfort of our homes and day-dreaming, he has been slumming it out in jungles of Bihar, trying to get a first-hand impression of the impact of demonetisation.
“I was out in rural Bihar last week just to get a sense of what is happening …. economic transactions are not being handicapped right now … Every day it is improving, I think it should get better. It is just a stoppage. I think in February we would not being doing this program on demonetisation; I can assure you of that … this is just a passing phase,” Basant said in a soothing tone, much to the relief of novice investors who are worrying that demonetisation may have dealt a crippling blow to the economy.
Been travelling through rural India a)Blind support for @PMOIndia b)Hiccups done – cash available almost business as usual – getting better.
— Basant Maheshwari (@BMTheEquityDesk) December 13, 2016
500 rupee notes are now available even in tier 3 towns like Kapurthala. Liquidity will get better with EACH passing day. @narendramodi
— Basant Maheshwari (@BMTheEquityDesk) November 24, 2016
Micro-finance stocks are like Rajnikant movies, grab a truckload of them first day, first show
On an earlier occasion, Basant had made his fascination for micro-finance stocks clear.
“… the small finance segment personally I am super bullish and we own almost all of them …. the microfinance segment .. that’s the place to be” Basant said.
Basant also indicated that he had aggressively bought a micro-finance small-cap stock which had recently issued an IPO.
“.. in the small cap like there was an IPO which came about two months back, two small finance banks back to back. One of them looked like a Rajnikant movie you just have to see it first day first show and we just backed up and bought truckload of it” Basant said.
Micro-finance stocks are badly hit by demonetisation
Micro-finance stocks are adversely affected by demonetisation because their customer base – people belonging to the non-affluent category – is highly dependent on cash. The non-availability of cash has crippled their business and impacted their ability to repay loans to the MFI, giving rise to fears of surging NPAs.
Demonetization has become a demon. Microfinance sector hit. Loan repayments down. Women SHGs are in deep trouble. https://t.co/wXGwJb2egF
— Gaurav Gogoi (@GauravGogoiAsm) December 23, 2016
One can this in the 3-month performance of the micro-finance stocks.
|Stock||3 Month Return (%)|
|Bharat Financial Inclusion (SKS Microfinance)||(31)|
What about the law to curb “harassment” by MFIs?
“We plan to bring MFIs under State Act,” Deepak Kesarkar, Minister of State for Home, Maharashtra, said in a chilling tone.
He said this step was necessary as several complaints had been received from districts across the state regarding “harassment” of women by MFIs which was leading to the former committing suicide.
— historia (@restodehistoria) December 21, 2016
Some experts are now asking whether Maharashtra will be the “next Andhra Pradesh“, reviving fears of the draconian law in Andhra Pradesh which crippled the prospects of micro-finance companies.
— BloombergQuint (@BloombergQuint) December 22, 2016
SIT to probe plaints against micro-finance cos – The Times of India https://t.co/kQzQPv1oS3 via @timesofindiaz
— Rohit Kothari (@KothariRohit74) December 19, 2016
— Sonaleeian Nil (@nilesh5590) December 17, 2016
A business of “organized usury”?
It may be recalled that Shyam Sekhar, the noted value investor, has earlier trashed the entire micro-finance sector as being based on “organized usury” and with “no real future“.
“I will not give a P/E to usury,” Shyam Sekhar had declared in a firm tone.
A similar sentiment was expressed earlier by Ramesh Damani.
“… my problem with the microfinance area is that first you are borrowing money from the regular bankers and selling it at a higher rate which of course doesn’t make sense as a business model to me. If you see the peer-to-peer landing platforms in America they have all been now under pressure. Secondly, what microfinance assumes is that every person that you lent money to is an entrepreneur that he can go out and give you a return on capital so there will be a very low amount of non-performing debts. My personal sense and I could be completely wrong that this is better left in the NGO sector and the social sector rather than the stock market the idea that every entrepreneur take money and return it back at a higher rate of interest doesn’t make imminent sense to me,” Ramesh Damani said with his characteristic clarity of thinking.
However, Basant continues to be “super bullish” about all NBFC stocks
Basant made it clear that he is not perturbed by any of the worries affecting the NBFC sector, including the micro-finance sector, and that his NBFC portfolio “has not changed”.
— CNBC-TV18 (@CNBCTV18Live) December 19, 2016
No confidence in Repco Home Finance?
Latha tried to coax Basant into revealing names of the housing finance stocks that he is bullish about.
“You were the early identifier of Repco Home Finance and the housing finance theme; will realty be impacted to such an extent that even the other sectors like cement and housing finance we should be wary about?”, she asked.
“I am super bullish on housing finance; not the one which you spoke about”, Basant replied, sending the subtle but grim hint that he is no longer bullish about Repco Home Finance.
Repco Home Finance is up to “dark deals”: Shyam Sekhar
Shyam Sekhar, the noted value investor, made the shocking allegation that there is a “huge scam” in Repco Home Finance and that he “always knew” that the company is up to “dark deals”.
Huge scam in Repco home finance. Raids by CBI. I always knew this Co was upto dark deals.
— Shyam Sekhar (@shyamsek) October 8, 2016
However, it is not possible to conclude whether Shyam Sekhar is correct or not. The experts at the valuepickr forum investigated the matter thoroughly and opined that the issue related to alleged corruption by an official and that there is no “scam” as alleged.
— Vikas Vishwakarma (@vikiitd) October 9, 2016
Basant’s bullishness for the micro-finance sector will have to be taken with a pinch of salt in view of the contrary opinion expressed by other savvy investors like Ramesh Damani and Shyam Sekhar. The impending legislation to curb alleged “harassment” by MFIs will also be a spoiler. However, Basant’s bullishness for housing finance stocks cannot be faulted. The stocks in this sector are powerhouses which will fill our portfolios with mega gains for several years to come!