All eyes on Vijay as actor likely to spell out party ideology in public TN meet (27-10-2024)
Top Tamil actor Vijay is set to elaborate on his political vision during his first public meeting in Villupuram after announcing his party Tamizhaga Vetri Kazhagam. Vijay aims to compete in the 2026 Assembly polls, shaking up Tamil Nadu’s political landscape dominated by the DMK, AIADMK, and a growing BJP.
IDFC First Bank Limited (27-10-2024)
I don’ think getting in the play of defending vs accusing management is a right way for any investor, that said, management wasn’t untrue or misleading. The merger effective date with Capital First was 18 Dec 2018.
Valuations are a tricky thing to understand, at the time of merger, bank was priced at 15 times TTM earnings (Earnings yield of 6.7%) with clearly so much work to do – as anyone could have inspected IDFC’s numbers and known the pain they are in and today, once again, bank is priced at 16 times TTM earnings. Yeah some may emphasis on P/B values, but even with that an informed investor would be aware of the quality of book back then and the quality of book today.
Why am I saying all this? My mentors taught me to stay quiet, don’t get into public debates, focus on understanding business economics, do your work yourself, don’t rely on someone else’s opinion. Ensure you always always have a margin of safety – without that, do not shell out a penny of yours. etc. – But being an attendant to so many investor calls over past several years, very few stand out as dedicated to business fundamentals, being long term oriented and not giving into short term qoq mentality, yet logic driven as opposed to over-emotionally attached that could result in overseeing basic flaws in their approach. And Mr. VV has been one of them in my humble opinion
For what it’s worth. I decided to send management an email appreciating the way they:
- Decided to address queries such as those of share price movement which no management usually entertains and a few just this quarter alone quietly asked the questioner to stick to quarterly numbers.
- Explained the fundamentals of banking several times so even a know-nothing investor or just a spectator (or as they like to label themselves “prospective investor”) has something meaningful to take away.
- In the heat of so much coming in from all directions, staying steadfastly focused on longer term picture of building a sustainable business – In fact someone gave them examples of predictability in ICICI numbers, perhaps they might not have recalled that Mr. V.V is an ICICI guy. Comes from same pedigree of Mr. N Vaghul, and Mr. K.V Kamath disciples – addressing queries with logic and rationale as opposed to reacting with emotions.
- And of course, building an excellent product/service that I and my family/friends love to use interact with in our day to day lives.
IDFC First Bank Limited (27-10-2024)
In Q1 concall, management has guided pressure easing in H2. During the conference call, management has guided 1.7 +0.4 +0.12 = 2.2% for the full year…the provisions for the H1 so far is lower than full year guidance …does that mean H2 would be worse.
Another thing, be it MFI or any other book, it is all part of banking business. Along with business cycle, some will do well and others may not. That is where management capability comes is in managing the risk- identifying early and taking course correction. HDFC has been able to do this pretty well that is it is HDFC. I see, IDFC has identified the risk and also started taking the right steps from Dec last year and lastly was upfront with investors. However, packing the MGI or toll as one time or business cycle issue is not appropriate wrt being transparent with investors (I know all management does this …but IDFC claims to be different)
Correct me if I am mistaken in my analysis.
Disc: Holding for past 6 years and planning to hold for long term.
IDFC First Bank Limited (27-10-2024)
they are conveniently misleading investors community by saying 75% of micro finance loans are covered under CGFMU now. but the truth is CGFMU provides coverage for loan amount above 10 lakhs. it means if a group having 15 lakhs out standing defaults cgfmu provides only 5 lakhs and remaining 10 lakhs should be provisioned by bank.
Indiamart Intermesh – Indian Alibaba? (27-10-2024)
- IndiaMart management acknowledges Justdial as a competitor but doesn’t perceive them as a significant threat.
- IndiaMart doesn’t view TradeIndia as a significant competitor either, considering them a “distantly respected competition.” They haven’t observed any notable changes or challenges from TradeIndia.
- IndiaMart recognizes the overarching competition from major players like Meta (Facebook, Instagram, WhatsApp), Amazon (including Flipkart, Zepto, Blinkit), and Google. They consider these giants as competition for everyone and are strategically focusing on finding a niche within the B2B market that these companies haven’t effectively addressed.
- IndiaMart believes the B2B market is a space where neither Amazon, Google, nor Facebook have achieved significant success, both in India and globally. They see this as an opportunity and are confident in their position within this market.
High Churn & Low Growth at IndiaMart
Churn:
- Elevated Churn: IndiaMart is experiencing higher than anticipated churn in its “Silver bucket” customer segment, leading to a net addition of only 2,400 customers in Q2 FY2025, a slight improvement over the previous quarter.
- Churn Breakdown: The churn rate is approximately 1% for Platinum and Gold customers (50% of the customer base and 75% of revenue), 4% for Silver Annual, and 6-7% for Silver Monthly.
- Impact on Collections: The high churn rate is impacting collections, which grew by only 5-6% year-on-year in Q2 FY2025. This is a significant slowdown compared to the 15-20% growth witnessed in previous quarters.
- Hypotheses for Churn: IndiaMart management believes the high churn could be due to:
- Reduced Value Proposition: Suppliers might be receiving a high volume of leads but with low conversion rates, leading to dissatisfaction.
- Buyer Decision Fatigue: Buyers might be overwhelmed with the number of suppliers, making it difficult to choose and leading to a decline in engagement.
- Execution Challenges: Internal issues like sales execution inefficiencies and delays in filling vacancies might be contributing to the churn.
Market Maturity:
- Growth Potential: IndiaMart management believes there’s still growth potential in the B2B market, drawing parallels to Google’s continued growth.
- Monetization Opportunities: IndiaMart sees potential in increasing monetization by implementing tiered pricing based on categories, locations, and demand.
- Focus on Value and Engagement: IndiaMart is prioritizing improving the platform’s value proposition for both buyers and suppliers by focusing on lead quality, buyer-supplier matchmaking, and overall user experience. This suggests they believe that enhancing the core value proposition is key to driving growth in a maturing market.
Summary:
While IndiaMart’s high churn and low growth are concerning, they don’t necessarily indicate market saturation. The company is actively addressing these challenges by focusing on improving lead quality, enhancing user experience, and exploring monetization opportunities.
The sources suggest that the B2B market might be transitioning to a phase where value creation and engagement are becoming crucial for sustained growth.