Absolutely, this is where the opportunity lies in investing in Satin, in my opinion because of the below -

The above might be due to cost of funds being high for Satin (BBB+) when compared to SKS whose cost of funds is lowest among MFIs. I do not have much idea on Capital Trust and Arman, but I think they should not be compared yet

• because their AUMs are too small in comparison and more importantly,
• Capital Trust is not an MFI I think and Arman's AUM has 50% of AUM and 50% of other loan book.

FY16 Net profit of Satin will almost double with about 50% increase in AUM because -

• H1 FY16 profit of Satin is almost equal to entire FY15 profits so we can expect a similar trend in H2 with H2 typically being better than H1.

RoE and RoA of Satin are around 19% and 1.6. Management expects RoE around 18%-20%.

Note: SKS I believe is not paying full taxes as it has accumulated losses during AP fiasco which are being offset, so the tax is around 20%.

Note: Since I have studied Satin, I'm putting my thoughts here only, please do not misconstrue this as my propagation, you must do your own diligence.

Mahesh,

Thanks for the views.

Regarding deploying the funds they have raised I have slightly different views. I also am holding MPS since a long time but I am not worried about the time taken by management in deploying the funds.

What was good was the opportune timing of raising the funds. And now I would prefer to give them plenty of time to find out a bargain deal and only then act.

Management cant act with token acquisitions only to please the market participants. In fact I would prefer that they focus more on the business rather than worry about market reactions. Because market reactions are transient whereas business decisions have long term implications.

And stocks correcting 30-40% from the tops is nothing new in the journey of big winners.

Till now whatever we have in front of us is the track record of the management in terms of improving a dying business after takeover and wealth creation for shareholders.

They are on record about their targets to double their revenues and I would like to give them time to prove their words. The rejig at the top with Mr Nishith Arora giving up the CEO place to his son and himself trying to look after the strategic aspects like acquisition etc seems to be a step in the right direction.

About correction in stock prices, I feel part of it might be due to general market conditions also.

What is good about MPS is the business characteristics of the company. There have been instances in the past too where prior to q1 fy 15 results also there were doubts about the growth prospects and just a quarter or two of good growth allays all fears.

MPS is one company where one can afford to wait because here he is being paid (dividends) for his waiting. I personally am invested in the company now for quite some time but never have had any worries. I feel its a company one buys and practically goes to sleep. And this sleep is more peaceful because of a lack of newsflow as compared to the pharma companies I hold and others I track.

disc: holding as mentioned in the post.

I did a comparative analysis of AUM and return on AUM for 4 listed NBFC. Please find below

Return on AUM of Satin is lowest at 1.5%. I feel Return on AUM should be important consideration while undertaking valuation for the company.

Some Multidisciplinary analysis.

Finance and Control systems(non linear variables):-
1.There was classic case of lollapollaza effect when the china stocks fell and Volkswagon issue causing the prices of MSL to fall.Both forces working in one direction and causing prices to fall.

Psychology:-
1.He is kind of fanatic by seeing what he has done for last 20 years.Every time meeting the audacious goal for every five years.
2.He is value creator which can be known from one incidence when they bought the US company in 2009 for ~ 200 million with billion dollar sales.
3. He posses few of the qualities of as mentioned in
1. Outsiders book
2.Prof Sanjay bakshi fanatic lecture.
Focus, value creation.

Maths ,philosophy and Biology:-
Law of small numbers:-The consistency of the performance for last 20 years can give better picture how company is managed.
They are doing one thing for long time which gives natural advantage of survival.

Value/Price:-
1.I think the better metric to look at for company with high amount of debt is not P/E as it can give skewed picture due to interest it need to pay.In this company we are sure that they will be trying to meet Sales target of 3x in next five years, considering if they are able to meet it, we saying the P/S ratio to fall by 1/3.Currently it is 0.9 so we will seeing it around 0.3 which give considerable amount of safety if it tries to sale at current level or even at median P/S of 0.6.

Risk:-
1.I may suffer from confirmation bias as the models here are not fully tested and based on historical facts of things happened to other companies in last 10 years.
2. Definitely, I may also suffer single cause and single effect as just try to highlight only those which worked for the thesis but not where these qualities also lead to debacle.

Disc:- Invested when lollapollaza effect was in play.

A friend in Delhi visited the site yesterday. The super structure (RCC) for 3 out of the 4 towers is complete, though the work itself is going on very slowly. With Sales not picking up, the developer is going slow on the project. However, the investment thesis for the Co. remains intact. In fact, it is more compelling than ever before! A lot of work at the site has been done since this thread was initiated. Around 50% of the project is completed. The market cap of the Co. is around 16-17 crores & it's share from the project revenues is likely to be many times over, but I expect this story to unfold over the next 2-3 years. The project location is excellent.

Attaching the project catalouge etc.RPS Infinia.pdf (1.4 MB)

Location Map.jpg1200x849 122 KB

Infinia Master Plan.jpg2750x1398 410 KB