I understand that dividends are a key metric for the company’s authenticity. However, that is not in question here given the past track record of sizeable PE investment.
Clearly, they have more capital than they need. This is why, the RoE is not justifying such a good RoA. One should also understand that giving out dividends will lower book value while improving RoE. Price to book multiple will also become more expensive.
However, the recent mild correction in stock price is due to Westbridge reducing their stake and general negative sentiments for NBFC. I feel that this stock will only perform after the complete PE exit. And for that to happen, valuations must be right for other large institutions to get into.
Otherwise, the company is demonstrating predictable AUM growth with an above-average RoA. This is just a case of a Quality business at an unfavorable price. I personally see limited downside by price, but potential downside with time.
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