The company that raised 1200 odd cr and trading at 2400cr Mcap is really not fair. As the interest rate cycle takes a U-turn the company should perform way better. This is classic example of a value investing for me. Best in class company with pristine governance and trading at peanut valuation.
Market has a few reservations from my understanding, namely:
- Company did an elevated dilution, what if the company is not able to grow the AUM and PAT at a rate that will compensate the dilution of EPS!
- What if the company is not able to maintain the asset quality!
- Future of co-lending!
One thing is really no-brainer for me, the TAM of MSME lending is incredibly huge and unlike affordable housing market, the competition is not proportional. Companies like SBFC finance and UGRO that have built the physical and digital infrastructure will take the lead, it’s just the matter of time.
One caveat is; the opportunity cost of remain investing in Ugro has been huge, when the whole market is exploding. IMHO it’s a choice, Ugro has all the ingredients to be a 10 bagger from here with low or no risk, even then the Mcap would be just 30k cr.
PS: Mcap would be around 3400cr if you include all the CCDs and warrants that will get converted into shares in the next 18months.
Disc: invested
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