Gujarat and Maharashtra are worst affected areas in this monsoon. So I think this year will be tough for gruh in growth with respect to Repco.

but still gruh has long history of performance and has weathered all weathers, so it will keep enjoying the current premium valuations.

Disc – Invested in gruh

I exited this counter because of following issues:

1) Even after several mails there is no reply from management to clarify the concerns.

2) Even after several years of profits, none of the promoter companies arrow textiles, delta magnets, delta corp will declare dividend and they are not promoter friendly.

3) When i spoke with them in last fy Q4, management told me that they had taken 4cr for capacity expansion and the profits will be reflected in Q1. But Q1 results are not good.

4) To surprise in the current AR, they invested the same 4Cr in mutual funds which is not good for small cap company.

Disclosure: i exited it completely after holding for more than a year.

Some points supporting buy:

1) The Trailing EPS shows 30% growth.

2) PE & PEG ratios are very good

3) Promoters Increasing Holdings

4) New product segments entry
http://www.arrowtextiles.com/Annual%20Report%20of%20the%20Company%20for%20the%20Financial%20Year%202014-2015.pdf

5) The ace investors are chasing textile industry, due to USD advantage, replacement of the MFA

Is it a good buy now in current bearish-scenario Or wait?

Yes, looks like a long call option for 10 years. Given the size of the company, it is difficult to have large allocation.

rightly said. The MOSL initiating coverage report on Gruh Finance http://www.motilaloswal.com/Financial-Services/Research/Detailed-Report/Initiating-Coverage/13921/511288
tells how Gruh has increased its LTV in FY15 over FY14 among other safeguards. It is a good report to read.

I would also give an unsolicited advice that, one has to be careful in looking at NIM. I would say that it is better to avoid looking at it. The formula for NIM in India is not followed outside the country. Let me explain.
NIM = Net Interest Income / Asset = (Interest Income – Interest Expense)/Asset
= Lending Rate – (Borrowing Rate*Debt)/Asset
= Lending Rate – Borrowing Rate*(1-Equity/Asset)
= (Lending Rate – Borrowing Rate) + Borrowing Rate * (Equity/Asset)
= Spread + Borrowing Rate * (Equity/Asset)

NIM mechanically depends on capitalization levels, that is Equity/Asset and Borrowing Rate at a given level of interest spread. For example, if Gruh and Repco have same borrowing and lending rates, then Repco would have a much higher NIM because it has much higher capitalization ratio. It is better to look at spread when we are trying to assess gross profitability. Infact it looks like Repco has lower spread and yet higher NIM!

There are problems with Indian definition of NIM that go beyond comparison between Gruh and Repco. For example, consider two lenders called RISKY and NOT RISKY with same Equity/Assets. RISKY lends to somewhat riskier borrowers, and hence, has both lending and borrowing rates higher by 1%. To summarize, both have the same spread and same capitalization levels but RISKY is in riskier lending business. In this example, RISKY will have higher NIM, because it has higher borrowing rate other parameters being the same. I would rather prefer to invest in LESS RISKY who is conservative maintaining the same spread at same capitalization ratio, while NIM will point to RISKY.