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Nikhil nim is function of leverage , spread is not.

let me explain if comp has 100 Rs. as capital and 400 Rs. of debt and has advances of 500 Rs. lets assume cost of funds at 8% and yield at 10% so spread is 2%

nim in Rs. will be (500*10%) - (400*8%) = 18 Rs.

nim as % of advances will be 18/400 = 4.5%
now if they have lower leverage say instead of 400Rs. debt 350 Rs and capital of 150 Rs.
(assuming same cost of fund and yield)
nim will be (500*10%) -(350*8%) = 22 Rs.
nim in % will be 22/350 = 6.2%

Just to clarify NIM is not function of leverage. NIM is function of cost of funds and yield you generate on assets.

Leverage is how much assets/loans you give out on your capital base. Increasing/decreasing amount of loans will not have any effect on NIM.

And yes ROA is most important measure to judge performance of financials.

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Thanks for your update Rajeev.

No one noted, but promoter Mr. Garg has released 1/3 of the pledged quantity as per information to exchanges on 28th Sep. Looks like over time all the pledged shares will be invoked. All round positive vibes. Pledge down from 14.34% to 9.01%.

1. Recent Govt. win is not informed to exchanges as this might be a normal course of business procurement, but is this the large govt. order that the company is talking about off late (in AR, Investor presentation)?

2. Agree to your assessment that if there is no hedging, then the benefit of recent rupee depreciation will directly flow to bottomline (should be around 50 lakhs - 1 Cr). But again, as posted above, it will be risky if INR depreciates, I hope management has a framed policy as currently its majority revenues are from exports.

3. As per your expectation, if the company declares dividend, there could be further re-rating as people will be convinced about its cashflow and revenue visibility.

4. I think the main thesis here is 1. Revenue visibility and bumper margin expansion as no CAPEX in the foreseeable future also leading to free cashflow and dividend.

Initiated a small position, volumes are really low with no institutional/FII interest as of now, which is a big positive I think. Based on Q2 results, will further invest into this company.