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Though the analyst whom I follow said to sell the share at 2000 price.
But lot of issues coming out.
Like the Gurumani issue which wasn't brought out only after the IPO listed (give a doubt on their intentions).
Now, last night I hear on CNBC Awaaz that in Andhra Pradesh case have been registered against them for using illegal tactics forcing farmers and driving them to suicide.
And now after further digging yesterday only came across these 2 links.
My earlier predetermined price was 1500 to sell. But now I am thinking to come out of this stock as soon as it goes above 1300 as I can't live under this threat perception.
Also, now I came to know why microfinance wizard Yusuf was against listing of microfinance as IPO.
Please friends give your thoughts on these news.
Last edited by magnet : 13th October 2010 at 09:21 AM.
Andhra Pradesh government is considering capping the interest rates that microfinance institutions can charge:
Quote:
The microfinance industry is in danger from some severe lending caps from the state of Andhra Pradesh. Sources in the finance ministry told CNBC-TV18 that the AP government is looking at passing a rule under the Money lending Act, capping lending rates at 16%.
I don't think for long term this scrip is good. Their lending rates are horrible. Fraud in top management etc.
In the coming months/years RBI also keen to give more banking license. So banks whether it is private or public they have no other option to give the money to the poor people with the lowest interest rates to survive their business.
Good Move Alchemist.
Handsome profits to you today
It was pure luck.
I logged in to my terminal and saw a price of 891 (intra-day low till now is 890).
I punched in an order to buy at 901 and the order got executed at 901. Both my order and trade are showing a timestamp of 11:06 AM.
Then, I switched on the TV to check if there was any negative development.
Fortunately, there is no major news on the stock today.
Usually, such sharp price drops are caused by news. I bought the stock as soon as I saw the price, but it is always better to check the news before buying into such falls.
Even if tomorrow it increases 25% I won't sell it unless I see 2000 price.
I am ready to wait for 5 to 7 years for same. When decided for long will keep it long unless something fundamentally hampers the stock.
Right now the only trouble I see is Vikram Akulas wife and 2-4 stray incidents. I agree interest rates are higher but if you see a similar model gold finance company you will see they charges less whereas the gold finance ones charges up to 36% interest.
If banks come into this sector, your bet SKS and others will be in big trouble w.r.t stock price.
Currently I think the biggest risk is the cap on interest rates. can't find the article now, but remember reading somewhere about government contemplating putting limit on their interest rates.
If banks come into this sector, your bet SKS and others will be in big trouble w.r.t stock price.
Currently I think the biggest risk is the cap on interest rates. can't find the article now, but remember reading somewhere about government contemplating putting limit on their interest rates.
Yes, they charge as high as 26% but government might cap it upto 24% and SKS said they are ready for same.
I know my bet will be in tough waters. But even that to happen will take time. Just like HDFC and HDFC bank both finances on similar line banks will come in this sector. But first they will see how SKS will do being the first in IPO .But lot of negativity have been spread on Vikram Akula's personal front plus .Also SKS now going the banking sector ways have created serious difference with Gurmani.
Again I'll repeat SKS is not a clean model and shouldn't be bet long but opportunity to exit at good price will be seen more.
People should not take long bets as it's a riskier stock.I am waiting long as I want to take the risk and can afford the same.
Only because of my analyst following I am going with 2000 rates else my target was 1500 and I guess its all time high is 1440.
I still don't see any bad on its fundamentals right now in its company.
Currently I think the biggest risk is the cap on interest rates. can't find the article now, but remember reading somewhere about government contemplating putting limit on their interest rates.
See post #2. .
A law may not be passed to cap the rates, but the governments (central and state) will make sure that the rates are reduced.
The key question now is by what margin the rates will be brought down.
Narayana Murthy is an IT expert, not an investment expert. .
True; just as Aziz Premji was, with his 5% stake (or was it $5 milion investment?) in Subhiksha. Yet, when someone of their stature takes a stake in a company, laymen like me cannot be faulted for assuming that these gentlemen would have done their due diligence.
True; just as Aziz Premji was, with his 5% stake (or was it $5 milion investment?) in Subhiksha. Yet, when someone of their stature takes a stake in a company, laymen like me cannot be faulted for assuming that these gentlemen would have done their due diligence.
Aziz Premji had bought 10% stake in Subhiksha for $50 million (Rs 230 crore).
Yet, when someone of their stature takes a stake in a company, laymen like me cannot be faulted for assuming that these gentlemen would have done their due diligence.
One should also consider the price at which that stake was taken by the person of that stature.
I don't know about Subhiksha but for SKS the common knowledge is that high-stature-man took it at 300, now it's up to the common man's common sense to decide whether to buy at 3 times that price.
They pay low price for a good stock, even if it goes bad their entry price saves them from the ruin.
It is my fault if I buy the same good stuff at a obscene price.
I don't know about Subhiksha but for SKS the common knowledge is that high-stature-man took it at 300, now it's up to the common man's common sense to decide whether to buy at 3 times that price.
Very true. Unlike the common man, he has a 2-year lock-in period for his investment.
SKS Microfinance has achieved an eps of Rs 20 in first half of FY 2011.
If current performance is maintained, the company can reach a full year eps of Rs 40.
At current price (Rs 791), it is trading at 20 times current year earnings .
Looking at the regulatory risks associated with this business, I feel the stock is slightly expensive at current price.
I think the stock will become a good buy at around 16 times current year earnings.
660 should be a good entry point.
Government's hostile approach may cause some problems in the short to medium-term, but the company should be able to survive and grow in the long-term.
One major risk is that government may decide to close down all micro-finance institutions.
It sounds stupid, but the Indian government can do anything. .
It's not the regulation of interest rate that is concerning now, many loans are getting defaulted.
People are not paying back loans .May be they are hoping that the institution gets bankrupt and they can save their money .
MFIs seek emergency funding from banks.
Quote:
Amid a clampdown on lending practices, microfinance institutions (MFIs) were seeking emergency funding from banks as defaults jumped, an industry group said. Shares of SKS Microfinance fell by a record.
I am strongly in favour of micro-finance institutions (MFIs)
Every blogger analyst freelancer, Tom, Dick and Harry is accusing micro-finance companies of charging exorbitant rates. Do they really know how lending works ? What are the costs involved ? How much it costs to service one loan irrespective of amount of money? Do they realize that the fixed cost involved (paper-work, manpower) is greater in percentage terms for a small loan than a big loan ?
On their line of reasoning one can accuse small shop keepers whose margin is much greater than the whole seller. And if we go by this logic of % then all the hawkers selling vegetables on carts should be banned.
Say e.g a vegetable hawker needs 400 Rs every morning to buy vegetables from the whole sale market - called mandi. And sells the same to middle class people at 600 Rs. Now he is making 50% profit day one, go figure the per annum rate of returns, what do we say is it ethical to allow him to make so much profit margin ? If the same amount is loaned to him by an MFI in the morning and at the end of the day when he has sold all his vegetables collects back the 400 Rs and charges him an "exorbitant" rate of 36%. The exorbitant interest amount comes out to be 400*36/100*1/365 approx 40 paise per day. Isn't it minuscule ?
Take another example an air conditioned barber shop employs 4 young boys, all are on monthly wages. Say one of them has an entrepreneur bug, who wants to open up a shop of his own or just buy a chair, a mirror and shaving instruments and set up a makeshift shop below a tree shade.
Who is going to finance him ? Our inefficient govt banks ? They won't even entertain him to open a savings account. This is where MFI can and is supposed to come into picture.
Other than charging "exorbitant" interest rate the MFI also force these poor clients to buy insurance products and can mandate them to do savings. Who is going to provide insurance of 400 Rs to a vegetable-hawker who while coming back from mandi is hit by an overcrowded bus and thus gets all his tomatoes smashed ?
MFIs are supposed to give loans for the purpose of income generation and not for spending on marriage death or liquor.
That's why the name micro-FINANCE and not micro-LENDING.
MFI can eradicate poverty if regulated and they adhere to their dharma.
Banks never give loans of 10-14% without collateral except personal loans where they are pretty sure that the borrower has good take home salary. Compare the interest rates for new car and old car, should not the rates be same for both? Why is home loan 10-12% but education loan at 16%? As there is no collateral credit card charges 36%.
Allow these small loans to scale up, then only the costs will reduce. ( SKS claims that they on their own have reduced the interest rates from 31% to 24%.)
Before pointing fingers at micro-finance institutions, ponder on the above points. Govt banks are totally inefficient to service loans of small amount such as Rs 5000. Micro Finance institutions are the only way out.
Last edited by Atiker : 17th November 2010 at 09:45 PM.
Even if tomorrow it increases 25% I won't sell it unless I see 2000 price.
I am ready to wait for 5 to 7 years for same. When decided for long will keep it long unless something fundamentally hampers the stock.
Right now the only trouble I see is Vikram Akulas wife and 2-4 stray incidents. I agree interest rates are higher but if you see a similar model gold finance company you will see they charges less whereas the gold finance ones charges up to 36% interest.
SKS Microfinance
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