It won’t be proper to compare q2 of CAG with q1 of Arman to check the leverage. Arman did qip in Dec 23 and hence its leverage is understandably lower and Capital Adequacy higher.
Secondly, on >4 borrowers, all the MFI lenders and SFBs have burnt their fingers. Everyone seems to have been chasing growth at the cost of asset quality. If this is not ever greening of loans, then what is this? Irony is none of these players are new entrant in the sector. They all have credible mgmts with existence of >20 yrs, to say the least.
Thirdly, to the best of my knowledge, almost all of MFIs have reported q2 numbers except Satincare and Arman. Some mgmts are expecting worst will get over by q3 and growth to resume from q4 others like ujjivan are saying pain to continue for next 2 quarters. The q2 of equitas reported the same pain and 16% of their AUM (MF Loans) has eaten away the PAT, in credit cost. To me, it appears, this pain won’t settle in next 6 months, and may take longer to settle down and report growth.
Fourthly, it seems there are no formal system of assessment of income levels of these mf borrowers. So, there are left to best judgement and assessment of each of these MFI. Their underwriting skills will get tested this time again.
Lastly, on technicals, stocks of all MFIs and SFBs are in stage 4 decline though fundamentally all are trading below with long term averages.
| Subscribe To Our Free Newsletter |
