NIM of 6 percent is not ethical banking at all. The way India is progressing, higher NIM would not be allowed by RBI policies for banks. IDFC is still running in NBFC model. Sooner or later they will have to change their policy of lending at higher rates.
The way many Banks(specially PSU banks) have started instant personal loan at lower rate , the way loan scrutiny and disbursal are being done digitally, the NIM has to come down for all banks in long run. The bank which will focus on high NIM would eventually grow slower with development of India. SO, In my opinion, Premium valuation of a bank on higher NIM would be a thing of past . Bank would be valued on asset quality (net NPA and GNPA) ,book value and offcourse growth. So, Federal Bank is undervalued for historical reasons which will change with time.
Posts in category Value Pickr
Federal Bank – A Turnaround banking Story? (15-08-2023)
E2E Networks Ltd – Listed small Cloud computing player (15-08-2023)
So the difference will be added to the P & L statement in later quarters. PAT margin could remain high this year, and start falling as depreciation accumulates. I think for this business, we need to monitor growth in ARR, the operating margin and cash flows.
Disclosure – invested.
Malkd’s Core Portfolio (15-08-2023)
Increase in GNPA is due to change in accounting process as discussed in length by management in concall.Spicejet repayment will reflect in next quarter in form of decreasing npa.
After listening concall , it appears that management is taking loan book growth seriously and were very eager to enter in new segment of colending, lending to nbfc outside tamil nadu, vehicle and home loan division.
It appears that management is accepting what it means to be over conservative in lending sme segment when it is underperforming. They are also explaining how there peers are able to maintain loan book growth by venturing in other segment.
Same show is expected to continue in next quarter with improvement in npa.
Disclosure: Banking is not my core competency and my views may be totally wrong. Taken tracking position.
Investment principal & checklist from great investor (15-08-2023)
#“Becoming A Portfolio Manager Who Hits .” ( BUFFETT)
.Think of stock as [ fractional shares of] business.
.Increase the size of your investment
.Reduce portfolio turnover
. Develop alternative performance benchmark
.Learn to think in probability
.Recognise the psychology of misjudgement
.Ignore market forecast
.Wait for fat pitch
Wonderla Holidays (15-08-2023)
Disney’s saving grace lately has been their parks. Also their highest growing segment is personalised service for park where family of 4 would normally spend $1000 and wait time for popular rides will be 1-3 hours. Whereas this personalised service – price tag of $5000-$6000 – they can zip thro rides with 2-3 minutes wait. It also comes with dedicated guide and special cart to roam around in the park
All premium segments – travel, shopping, automobiles – is seeing crazy traction