Yes, looks like a long call option for 10 years. Given the size of the company, it is difficult to have large allocation.
Posts in category Value Pickr
Stylam- Decent Fundamentals with Cheap Valuation (07-09-2015)
Surprised to see Stylam annual report in company website. Didn’t get any mail from company, not updated in bse site also.
http://www.stylam.com/wp-content/uploads/2015/02/ANNUAL-REPORT-FINAL-2014-15.pdf
REPCO home finance – another Gruh in the making? (07-09-2015)
rightly said. The MOSL initiating coverage report on Gruh Finance http://www.motilaloswal.com/Financial-Services/Research/Detailed-Report/Initiating-Coverage/13921/511288
tells how Gruh has increased its LTV in FY15 over FY14 among other safeguards. It is a good report to read.
I would also give an unsolicited advice that, one has to be careful in looking at NIM. I would say that it is better to avoid looking at it. The formula for NIM in India is not followed outside the country. Let me explain.
NIM = Net Interest Income / Asset = (Interest Income – Interest Expense)/Asset
= Lending Rate – (Borrowing Rate*Debt)/Asset
= Lending Rate – Borrowing Rate*(1-Equity/Asset)
= (Lending Rate – Borrowing Rate) + Borrowing Rate * (Equity/Asset)
= Spread + Borrowing Rate * (Equity/Asset)
NIM mechanically depends on capitalization levels, that is Equity/Asset and Borrowing Rate at a given level of interest spread. For example, if Gruh and Repco have same borrowing and lending rates, then Repco would have a much higher NIM because it has much higher capitalization ratio. It is better to look at spread when we are trying to assess gross profitability. Infact it looks like Repco has lower spread and yet higher NIM!
There are problems with Indian definition of NIM that go beyond comparison between Gruh and Repco. For example, consider two lenders called RISKY and NOT RISKY with same Equity/Assets. RISKY lends to somewhat riskier borrowers, and hence, has both lending and borrowing rates higher by 1%. To summarize, both have the same spread and same capitalization levels but RISKY is in riskier lending business. In this example, RISKY will have higher NIM, because it has higher borrowing rate other parameters being the same. I would rather prefer to invest in LESS RISKY who is conservative maintaining the same spread at same capitalization ratio, while NIM will point to RISKY.
Avanti Feeds (07-09-2015)
Was speaking to somebody on aqua culture in ongole.
Here is what I was able to gather during the short discussion. Since this is a second hand account, the information needs to be validated.
– shrimp prices went down drastically. A large number of people in the area have lost money recently.
– state government as giving subsidy of around 90 % on hatchlings
– there is a fund created to facilitate loans through banks
– insurance is being is arranged to recoup in case of any losses
– there is a huge shrimp processing facility coming in Eluru.
Disclosure: No investment in Avanti feeds. Might be biased against due to prev. bad experience in aqua culture.
Emkay taps and tools (07-09-2015)
Given the margin levels, there is some core competence in the business for sure.
Valuations cant be called expensive by any stretch of imagination.
RHP never makes forward looking statements, so future plans is a black box right now.
Untested, but worth a good look – as the section is called 
REPCO home finance – another Gruh in the making? (07-09-2015)
As per BSE announcement:
Repco Home Finance Limited has informed the Exchange that the Company has raised Rs.100 Crore by mode of private placement of 1000 Zero-Coupon Secured, Redeemable and Non-Convertible Debentures (SRNCD) of face value Rs. 10,00,000 each (at par) and maturing on September 06, 2018. (XIRR 9.21%).
This should further reduce the cost of funds as 9.21 is lesser than its current cost of funds which is about 50 basis points above 9.21, if I remember correctly. Though 100 crore is less compared to its current borrowings, the future seems pretty obvious that the cost of funds for Repco will come down BUT the benefits may not be passed to its non-salariedcustomers at the same rate which is more beneficial to Repco as it has higher proportion of non-salaried borrowers in its fold.
Add to this, any further reduction of interest rates by RBI (as and when) should aid its bottom line.
Disclosure: invested.
Syngene International IPO – Views invited (07-09-2015)
Thanks Mahesh for pointers..Definitely I will go through earlier AR’s. Even DRHP document as well covers in detail about the industry dynamics. Although I have not read any other company DRHP doc, but I felt, they provided all the details as far as possible. The even listed many risks as well, which I thought were trivial.
Still am new to the financial ratios and will work towards it to understand your points,
As you said, it might get re-rated once some funds joins the party. And looking at the MNC competitor Quintiles, which is a Fortune 500 company with more than 25K employees(they even have a s/w dev center in Bangalore), Syngene has got a great future.
Am also invested in PI as well and the work you have done there is really marvelous and thanks for that.
I think, from your comment in PI thread, I came to know about Syngene.
REPCO home finance – another Gruh in the making? (07-09-2015)
It’s very difficult to replicate what Gruh has done but Repco seems to be doing a good job compared to its other peers. Gruh will command premium over Repco in the foreseeable future is what I believe. Overall, in this sector whoever focuses on opportunity size with prudent risk management will grow a lot and also fall lesser in case of bubble bursts in future.
Disclosure: Invested in both companies discussed.
REPCO home finance – another Gruh in the making? (07-09-2015)
Let’s be cautious here! I would give Gruh higher marks in risk management. No doubt they have slowed down loan growth compared to Repco. There is rural distress going on so better to be safe than sorry later. Agri comm. prices have crashed worldover leading to great trouble in rural economies. With the benefit of hindsight, Gruh had done it before 2008 crisis so current slowdown in Gruh’s growth could be deliberate.
Disc: Invested with high allocation
Orbit exports (07-09-2015)
Hi @sajijohn ,
Warrants issued once in while is fine to raise capital.
But each year issuing warrants does seem concerning which Pankaj Seth is is being issued frequently. The promoters have been increasing their stake thru warrant and not buying from open market.
Exited due to same reason.