@richdreamz

Very much agree with you on first point.

Moreover Gruh finance being the company promoted by HDFC has an access to low cost of funding ( thanking due to higher rating by the rating agency ). Gruh finance has long track record of weathering all kinds of economic situation compared to repco home finance ( i don't doubt repco on that ).

Gruh finance average ticket size is of 6 - 8 lacs which I think no big home finance companies would be interested in because that would be from non salaried people and unorganized sector which is very difficult and requires lots of energy and expertise for credit evaluation.

Gruh finance has in house credentials of 35 check points for evaluation of a loan applicant and based on that merit the interest rate of the loan is derived. So interest rate depends on case to case basis.

No high level official can do bias on the interest rate accreditation system.

That's the reason Gruh finance is able to maintain the above average performance and enjoys the premium in the market.

@nikhilupai Check Ankit's post on Jun 20

1) If we are looking specifically at book value to value Gruh, should we not be cognisant of the fact Gruh pays around 30% of its profits as dividend and so the book value is understated by that extent? Also, this is also a reason that RoE remains high. Managing this consistently for long term is a feat.

2) Personally, I will always pay premium to Gruh when compared to its peers as long as the current metrics remain. By how much is the point of contention. When we look at P/E in the above table, it is 20% premium over Repco and it's double when we look at P/B. There is no correct metric here I think but I will go with P/E because of RoE.

3) Gruh will grow at 25% for the next 5-7 years and the probability and predictability of this is very very high. The management itself said this during an interview in money control about 3-4 months back. In fact when asked, by how much would you grow this FY, Sudhin Choksey told, I'm not sure as economy is still recovering but over the next 5-7 he said he is confident of growing at 25% minimum (Yes, he said this) and more if economy prospers.

4) Market opportunity being so huge, the financial metrics will stay inflated for all the companies in this sector and more so for the LEADER.

I hold Gruh.

I believe Repco's numbers for ROE, Loan Book Growth and NPAs are very close if not as good as Gruh. (If you want, I'll share the numbers as well) So it, doesn't justify the 2x difference in P/B.

Agree on banks focusing on the HFCs segments in the future, and a comfortable P/B of 7/8 for Gruh.

Don't agree on borrowers getting impatient for lower rates. Half the book is self-employed segment where they don't have much bargaining power due to lack of other alternatives apart from Gruh, Repco, etc.

Hi Ankit,
I am unable to find the excel sheet you are talking about. Can you please share it again on the thread.

Thanks,
Nikhil