@anand6 and @Vivek_6954 and others have covered the relevant points on Satin and MFI nicely.
I think the NPAs are less due to
a) behavioural aspects like social/peer cognisance
b) Tiered structure of loan (quantum of loan increases as they complete pre-paying past loans)
c) Group loans
d) Relationship with lender due to timely/needy lending
e) If defaulted, the next option is from loan sharks which is very burdensome.
Particularly with respect to Satin vs. SKS Micro, I’m not sure how relevant is this valuation metric but I typically go by this –
a) Valuation Approximate figures –
1) SKS : AUM/Market cap = 6000/6000 = 1.
2) Satin: AUM/Market cap = 2200/1100 = 0.5.
PE and Book value wise as well Satin is a bit valued lower than SKS while I think Satin needs to be valued at or more than SKS valuations due to reasons mentioned in the thread I have initiated and below.
b) Geographic presence –
Satin is working in relatively under penetrated North Indian market and it has first mover advantage in some important states like UP/Bihar and also the leader in these important states.
c) Promoter stake, quality, experience –
I think both are neck to neck here and Satin would have upper hand as even during the AP fiasco days the NPA level did not cross 0.3%, which is great.
d) PE investors –
As Vivek mentioned, the PE investors are specialised MFI investors, for example NMI – Norwegian Microfinance who also invests in other countries like Bangladesh which is the originator of Microfinance concept.
http://www.nmimicro.no/about-nmi/introduction
e) Debt ratings and Opex/AUM metrics –
The current debt rating of BBB+ will move few notches up as the company ups scale with efficiency and so cost of funds will come down and better profitability while the same scope for SKS is limited as already SKS costs of funds is lowest among its peers. Opex/AUM for Satin is the lowest at around 6% which provides the efficiency with which Satin operates.
The risks are already mentioned in the Indian Microfinance thread by others and me.
As a general note, Microfianance companies should do well with the required regulations almost in place. Passage of MFI bill should provide further fillip (I need to read further on this).
Related thread initiated by me for further details on risks etc:
Disclosure: I hold Satin shares and this is a genuine discussion on the company. You need to evaluate and invest according to your risk profile.
| Subscribe To Our Free Newsletter |
