@Shivkumar Thank you for your comments. I feel so too.

I am looking forward to learn relation between above mentioned variables. Seems a bit complex. More comments are welcome.

Discl : Not invested.

in these matters it is best to defer to the wisdom of management.

there is significant material difference between Gruh and Repco. While the
former concentrates on Mumbai and Gujarat, the fastest growing markets in
the country, the latter has its base in Tamil Nadu.

Also Repco, more than Gruh, concentrates on small ticket loans catering to
self employed people. For this class of people income is lumpy and so are
payments made by them. Naturally NPAs too tend fluctuate though it evens
out over the long term.

The positive thing about Repco is the slightly higher rate of interest it
charges borrowers since it has some kind of a monopoly in its market.

I presume once the economy begins booming, Repco will become aggressive in
lending and thus increase leverage for this purpose.

disclosure: holding Repco in core portfolio and hence my views may be
considered biased.

@kanvgarg123

First to answer on PI –

I too had that doubt before I initiated my position here, however my line of thinking is below –

• Agri input has 3 main components

1) Seeds: From where the plants grow. This is the fundamental input for agriculture sector. Farmer depends on seed prices, seed quality for his acreage. The more he seeds the more acreage. So, government cannot have the prices of seeds grow as per the whims and fancies of seed producers. Agriculture still occupies major share of our GDP. So, government will interfere from time to time. Their own political success largely depends on how well farmers do!

2) Fertilisers: These are the chemicals that plans need to grow faster. The basic nutrients that nature provides for plants are oxygen, hydrogen etc but if provided with further nutrients like phosphorous, nitrogen plans will grow better. Here too I believe government intervention is there.

So, Seeds + Fertilisers make the basic requirements for agriculture. Fundamental requirements.

3) Pesticides/Herbicides etc.: This, in my opinion, is value added product. Farmers use it or not is entirely on their discretion. Pesticides as the name suggests are used to KILL pests. This is like downside protection which is discretionary in nature but very important. Since this is not a fundamental aspect of agriculture (though very critical), government would not like to interfere in its pricing. As such the pesticide usage is very low and we lose anywhere around 28-30% of the crops to weeds, pests, rodents, fungus etc. so any farmer education in terms of its usage will protect their downside.

My basic argument is, seeds and fertiliser are the basic ingredients without which no agriculture production itself can happen while pesticides are for downside protection. Government can freely interfere in basic things of a business not on a value added product used to protect downside of a business.

Another side to PI is, seed penetration is 100%, in a sense, I mean every agri land which has some plant grown on it has a seed, right? But that very agri land which has a seed in it does not have pesticide yet. In fact, we are at the bottom of the ladder in pesticide usage and for us to achieve food security, plant protection and better quality seeds are inevitable.

Yet another investment angle is, agri inputs only form 40% of the PI revenues while CSM form 60% where the high margins are there along with good order book! Sorry, I have explained in far more lengthy manner and bore you.

Page: yes, the valuations are on higher side, but Page would have earned them. But I’m not sure how long will they sustain if there is any slippage in revenue growth. Mostly might see time correction after the initial sell off (IF at all). Speedo, I’m happy to know that the prices are on higher side. It brings the aspirational value to it. If economy were to grow at 8+ for 3 years straight, you will find many middle class families affording these prices. Anyway, it forms a very small part of revenues as of now. Having been bullish on Page in different threads, I have added MPS and Cupid at the cost of Page and Gruh (though little tweaks only).

Thanks for your contribution. I was looking at this company financials yesterday and I found it quite interesting. Seems a meaningful bet given that the industry has a very few players.