Posts in category All News
Sell-off in Amtek Auto counter; stock down 11% (07-09-2015)
Palm oil to test resistance, dip (07-09-2015)
Cyber liability insurance must for entrepreneurs (07-09-2015)
Catching the falling knives (07-09-2015)
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.
MCX gold moves sideways (07-09-2015)
‘If the market falls everywhere, India can’t be on its own song’ (07-09-2015)
Selling pressure pounds pepper (07-09-2015)
Soya in bear grip (07-09-2015)
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.