Manappuram Gen. Finance & Leasing Ltd
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2635
Printed Date: 25/Apr/2024 at 7:39pm
Topic: Manappuram Gen. Finance & Leasing Ltd
Posted By: prabhakarkudva
Subject: Manappuram Gen. Finance & Leasing Ltd
Date Posted: 19/Jan/2010 at 10:22pm
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Summary
Manappuram General Finance is a South India based NBFC specializing in lending against household gold. Promoters have 6 decades of experience in money lending business and have successfully transitioned from a relatively risky, vehicle financing/ hypothecated loans to more secured gold loan product. Positives 1)Rapid Business growth: MAGFIL’s AUM has grown at 48% CAGR over FY07‐FY09 to Rs 12.5 bn and is expected to grow at a pace of 60% during FY09‐FY12E to reach Rs 51.1 bn by March 2012. 2)High margin business: High yields enable the company to earn higher margins. The company earned a margin of 16% in FY09 and we expect it to be maintained over the next two years as well. 3)High return ratios: Despite the expected equity dilution (approval to raise Rs 3 bn), MAGFIL is likely to generate an average RoE of 27% over FY10E‐FY12E supported by an average RoA of 5.3%. Concerns 1)A sharp drop in gold prices can impact collateral‐value ratio and increase the chances of defaults. 2)Significant slowdown in expansion plans could impact the business growth estimates. Scale of Opportunity India is one of the largest holders of gold stock in the world and privately held gold stock is estimated at 15,000 tonnes. Loan against gold has been traditionally availed by rural and urban households alike generally from local moneylenders/ pawn brokers or from cooperative and regional banks.Industry interactions suggest that in India, 400‐600 tonnes of gold stock are estimated to have been utilized as collateral for loans. Banks and NBFCs view this as an opportunity to grow their secured lending book earning high yields. The company operates in a niche segment of retail loans against gold jewellery and as a company policy, only ‘household used jewellery’ is accepted as collateral. Funding is not provided to jewelers/ traders or pawn brokers.Manappuram Group, founded in 1949 to carry money lending business,transformed into gold lending company post 1999 and started to run down its vehicle lending book. The company caters to the short term fund requirements of individuals with an average ticket size of ~ Rs 20,000. The key advantage over banks lies in the network reach and the ability to cater to small ticket size loans (catering to small ticket size loan becomes cost inefficient for banks). Vision The promoters envision the business to scale up rapidly touching Rs 100 bn of assets under management by 2013 and make further in roads into the unorganized gold lending market in south and west India. Private equity investors like Sequoia, Ashmore Alchemy, Hudson Equity Holdings, Granite Hill have invested in the company since 2008. Market Cap Market Cap is almost half of a similar NBFC like Shriram City Union Finance and this company has better return ratios. ------------- Take your chances and keep them in a box until a quieter time. |
Replies:
Posted By: prabhakarkudva
Date Posted: 19/Jan/2010 at 10:30pm
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This could probably be a hedge for Titan.If Gold goes down Titan benefits and if it goes up Manappuram does well. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: hit2710
Date Posted: 19/Jan/2010 at 11:56pm
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The company has shown scorching growth in revenues from around 16 crores in 2005 to 165 crores in 09 and likely to cross revenues of around 300 crores going by the first half of current year.
Net Profit has risen from 2.69 crores in 05 to 30 crore in 09 and for first half, sales is around 153 crores and net profits is 32 crores giving half yearly eps of around 19. Market cap is around 1140 crores. The stock has run up from a low of around 110 in jan 09 to current price of around 680, already six bagger in 1 year.  ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: prabhakarkudva
Date Posted: 19/Jan/2010 at 9:26am
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I think the opportunities for growth are huge and at cmp it is selling at about 18 times FY10 earnings.What i also liked about this company is that funding is not provided to jewelers/ traders or pawn brokers.Not even to people who get brand new jewellery.Only used family jewellery can be used to procure a loan.And since Indians attach a lot of sentimental value to family jewelllery probability of default will be relatively low.
I am interested in knowing what members think about this business?I already got kulman ji's view though the other day.  ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: hit2710
Date Posted: 19/Jan/2010 at 9:54am
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While the growth looks very good especially in the last few quarters, the valuations look a bit stiff and after the recent spurt in the price, there could be some consolidation offering some good buying opportunities on corrections. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: deveshkayal
Date Posted: 19/Jan/2010 at 10:05am
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Yes,valuation is a concern. Look at Banks and NBFCs from a Price-Book Value rather than PE. Lending businesses have always traded at low PE. Also, market cap will rise after its merger with its subsidiary. Nevertheless, its a great business model which i would like to buy only at a reasonable valuations. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: prabhakarkudva
Date Posted: 19/Jan/2010 at 10:08am
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Deveshji,
At what price can one be comfortable buying this one? ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: deveshkayal
Date Posted: 19/Jan/2010 at 10:11am
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Around 580-600. Other option is let it consolidate for some time and then it might look reasonable on FY11 earnings. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: tigershark
Date Posted: 20/Jan/2010 at 1:33pm
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from where does cheap capital come for this co? does it have to dilute frequently to raise capital. what is the NIM ?
------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: prabhakarkudva
Date Posted: 20/Jan/2010 at 1:43pm
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Business growth received a boost after the company started getting lines of credit from banks like ICICI, Axis, SBI and IDBI. Due to capital and funding constraints the company preferred to assign a majority of its loans to banks. While assigned loans comprised 82% of the total assets under management in FY07, by FY09 the proportion reduced to 65%.The management plans to grow its balance sheet size by increasing the proportion of loans on the company’s books.
The company has Rs 1.3 bn lines of credit from banks which it can drawdown based upon its disbursement requirements. MAGFIL is able to pass on the increase in cost to its customers and maintain the margins.NIM for FY09 was 16.3%. The company has established credit lines from various banks and NBFCs. They have an added advantage over other NBFCs as the funds from banks qualify as indirect priority sector lending. Moreover, MAGFIL gives priority to banks with which it has credit lines while assigning/ securitizing its AUM. This helps in reducing the overall cost of funds for the company. Some banks/ NBFCs that have sanctioned credit lines are SBI (Rs 4 bn), ICICI(Rs 3 bn), IDBI (Rs 1.5 bn), Axis Bank (Rs 1.5 bn), PNB (Rs 1 bn), OBC (Rs 1 bn)and Fullerton (Rs 2 bn). ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: TCSer
Date Posted: 20/Jan/2010 at 1:58pm
| Is Muthoot Capital in similar line of business & if so wouldn't be a far cheaper option? |
Posted By: prabhakarkudva
Date Posted: 20/Jan/2010 at 2:01pm
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Muthoot Capital,Shriram city and regional south indian banks can be classified as competition.But MAGFIL is into a niche gold loan business while for the rest gold loan is just another part of the portfolio.Also MAGFIL was afford to make very small ticket loans like 20,000 while it is not cost effective for others to do so. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: TCSer
Date Posted: 20/Jan/2010 at 2:49pm
| Muthoot I believe is also into loan against gold & advertises very heavily in Northern regions.Is that not the case? |
Posted By: wiseowl
Date Posted: 20/Jan/2010 at 3:55pm
Muthoot Fincorp, and not Muthoot Capital, is the one which gives gold loan. By the way, there are two "Muthoot" groups... ------------- You alone are responsible for your actions. |
Posted By: nannu_68
Date Posted: 20/Jan/2010 at 6:40pm
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ek haathi wala hai, dusra pata nahin..
------------- nannu |
Posted By: prabhakarkudva
Date Posted: 20/Jan/2010 at 6:52pm
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Manappuram declared its Q3 2010 results today.
Income from operations is up 3 times at 131 crores.Eps has doubled to Rs.12 per share.Nine month EPS is at 27 compared to FY09 full year EPS of 22. Good set of results. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: prabhakarkudva
Date Posted: 20/Jan/2010 at 6:55pm
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We might see some fireworks tomorrow. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: smartcat
Date Posted: 20/Jan/2010 at 12:07pm
| I wouldn't invest a lot of money in NBFCs. If the tide turns (Eg: Indiabulls Finance), all those profits will quickly disappear. Check on the risk factors of investing in a stock like Manappuram, and assume that such an event will definitely happen during the time you are invested in the stock. |
Posted By: tigershark
Date Posted: 20/Jan/2010 at 7:25am
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i want to see this co live thru a full cycle of high and low interest regime.till then i will reco those businessthat have lived thru that cycle for many many yrs
------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: deveshkayal
Date Posted: 20/Jan/2010 at 9:58am
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There is no difference between Indiabulls and ADAG's management. I have no idea on Manappuram but I have great respect for Shriram Group hence my preference for Shriram City over Manappuram. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: prabhakarkudva
Date Posted: 20/Jan/2010 at 10:10am
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Fair points all.Management of Manappuram seems decent to me.They have been around for 6 decades albeit on a much smaller scale.But i like to look at the big picture.The market for this gold loan thing is humongous.Even if they(Manappuram,Shriram city et al) are able to create liquidity for 10% of the 20,000 tonnes of gold that indians hold we can have some big winners.
And i do agree with tigershark that we need to see how this company performs during different interest rate cycles but i am of the opinion that when you think you have a winner one should buy first and worry later even if that means losing some money in your quest for big gains. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: arunshah2k
Date Posted: 20/Jan/2010 at 11:35am
Actually, the results are slightly below expectations. Market has already priced in net profit of 125 crores as per the management.
Here is the expectation that management has set, so I doubt the stock will move up for some time.
"He said the company’s performance was excellent and it expected a net profit of Rs 125 crore for the current fiscal.
The company is expected to have a net profit of Rs 36 crore for the quarter ended Dec 31. Magfil had made Rs 17 crore for the first quarter and Rs 27 crore for the second quarter of the current fiscal. Profit for the last quarter would be around Rs 45 cr ore, Mr Nandakumar said. " |
Posted By: prabhakarkudva
Date Posted: 20/Jan/2010 at 11:47am
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Thanks Arun.That means the company is available at about 16 times FY10.Its interesting though that the management is able to give guidance not just for one quarter but two.
------------- Take your chances and keep them in a box until a quieter time. |
Posted By: Alok Bhola
Date Posted: 02/Feb/2010 at 2:57pm
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Following risks come to mind:
1. Rising interest rates over the coming 1-2 yrs will increase their cost of funds;
2. Increased competetion from banks / NBFCs / Microfinance institutions might lead to slowdown in expansion / pressure on yields. Their FY09 yield of 31% definitely appears to be abnormally high and might have to fall to 20-22% over the next few years. Even Indiabulls (the Great!) used to sport yields of 'only' 20%.
3. If prices of gold fall significantly over a short period, defaults may rise as LTV is 80-100% for about half of the loans;
4. They have tripled their branches from 300 to 870 over the past 2.5 years and plan to further double the same to about 1800 over the next 3 years. They also plan to increase AUM four-fold, from Rs 2300 cr to Rs 10,000 cr over this period.
Productivity of new branches is significantly lower than old branches. Managing such a huge expansion and maintaining acceptable productivity (finding employees who can quickly assess the value of jewellery and process loan in a reasonable time) at new branches may pose a big challenge;
Keeping in view the above risks, current T4Q P/E of around 20 appears expensive. 12 - 15 appears to be a reasonable P/E range to buy into this company.
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Posted By: TCSer
Date Posted: 02/Feb/2010 at 11:46pm
| lATEST ISSUE OF foRBES INDIA COMPREHENSIVELY COVERS THIS stock as one of teh undiscovered gems with huge growth ahead n prescient PEs have already invested in it |
Posted By: master
Date Posted: 28/Feb/2010 at 10:00pm
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http://www.suchetadalal.com/?id=2eb28a00-1513-156c-4b86595c8003&base=sections&f - Manna Pure & Simple ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: amitdip
Date Posted: 09/May/2010 at 2:17am
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VC, PE firms lining up for mass exit
by www.indiape.com on Fri 07 May 2010 01:11 AM IST | Permanent Link | Cosmos Venture capital (VC) fund Sequoia Capital’s exit from Kerala-based non-banking financial company Manappuram General Finance and Leasing Ltd two weeks ago is just the beginning of an avalanche of high-return exits lined up for this year. http://www.indiape.com/blog/_archives/2010/5/7/4522599.html |
Posted By: PKB2000
Date Posted: 09/May/2010 at 8:25am
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Bonus stocks are not issued! Stock splits are reflected. ------------- I am always doing that which I cannot do, in order that I may learn how to do it. ~Pablo Picasso |
Posted By: jayakrishnan
Date Posted: 10/May/2010 at 7:06am
| any idea when Mar'10 results will be published? |
Posted By: jayakrishnan
Date Posted: 18/May/2010 at 7:04am
| very srong quarterly results posted. |
Posted By: Alok Bhola
Date Posted: 07/Jun/2010 at 10:03am
| http://www.seasonalmagazine.com/2010/06/can-manappuram-keep-growing-at-60.html - Can Manappuram keep growing at 60% ? |
Posted By: jayakrishnan
Date Posted: 08/Jun/2010 at 11:35am
| it has shown consistent sequential QOQ growth from jun-08. hope it continues to do the same. |
Posted By: basant
Date Posted: 09/Jun/2010 at 7:13pm
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With finance companies the key question to ask is asset quality with growth. Has anyone worked out their cagr of non performing assets? If that is lower then growth in asset book the company is prima facie on the right track. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: prabhakarkudva
Date Posted: 09/Jun/2010 at 7:45am
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Their NPAs as a percentage of their asset book have been extremely low about 0.25%.I wonder why Sequoia sold during this growth phase though.What is it that they know that the market doesn't? ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: Alok Bhola
Date Posted: 09/Jun/2010 at 8:00am
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1. What is the competitive advantage they have that cannot be replicated by others ? 2. How much loan to assessed gold value do they provide? I think I read somewhere (but not sure) that they provide up to 90-95% of assessed value of gold as loan. If this is true, they are sitting on a minefield. |
Posted By: prabhakarkudva
Date Posted: 09/Jun/2010 at 8:11am
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It averages to about 75%.The gold price calculated is the average of the last 3 months since most of the loans are of 3 month tenure.
And people generally think twice before defaulting on family jewellery. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: manishdave
Date Posted: 09/Jun/2010 at 8:28am
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Their business model is solid. I am not worried about defaults even though they are growing rapidly. Only think is that there is no entry barrier. Business still will be around but spread will come down. Reason Default is no concern is: PPL are not taking loan to speculate on gold. That was the case when India bulls and other lent big amount to single group of ppl. If they lending only group of home owners/car owners/truck owners that is big touble for black swan like event. Here they have diverse group of borrowers and that looks solid. |
Posted By: prabhakarkudva
Date Posted: 09/Jun/2010 at 10:41am
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I like this business but somehow i don't have the heart to bet big on this when there are more certain and 'simpler' consumer plays around.I guess i need to change this attitude if i want to strike it big.Its confusing really since the knowledgeable guys always say think of the downside before the upside and yet to strike it big reasonably fast you need to go for the higher risk higher reward kind of plays. ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: CHINKI
Date Posted: 09/Jun/2010 at 10:47am
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Other than fall in gold price, there is no risk here.
To that they have kept almost 30% cushion in the loan lending amount. Hope you would have read the article in the last page. Two good things to note: 1) Promoter has come up in a hard way. He has given a guidance of 60% growth for next few years 2) Regarding future model to be followed, he has clearly mentioned that Manappuram will not follow Kotak way as it will cost the investors. Concern for the investors which is there in the management mind is itself a good sign. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: shivkumar
Date Posted: 09/Jun/2010 at 11:26am
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Chinki, With the objective of keeping a concentrated portfolio if one has to choose between Manappuram and Yes Bank which would you choose? |
Posted By: CHINKI
Date Posted: 09/Jun/2010 at 11:40am
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Difficult choice.
My estimate is that Manappuram will grow faster than Yes. I have seen their branches in Bangalore. It is in the first or second floor (rent will be less) of a building, at a location where lower middle class population (targeted customers) is more and with bare minimum infrastructure. There are only two worries with this company. One is that they should not diversify into too many things like Muthoot Finance (not listed)who are competitor for Manappuram and are into everything like schools, tvs, infrastructure and so on. Second is the gold price. If the price falls comes down, the way it has gone up, then there may be few risks. But during my visit to their branch office, I have seen their schemes. They consider only 80 to 85% of the gold wt. as well as the gold price for calculating the total loan amount. They will have a cushion of 25 to 30% of gold price fall. Giving more than 90 t 95% loan is only for selected, known and old good customers. I have also enquired in case if there is a mistake from the staff?? To that officer replied that, you have to enter the gold weight and the scheme (which changes everyday) the customer wants to take and system gives back the maximum loan amount to be given to the customer. Staff can not give loan more than that. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: Alok Bhola
Date Posted: 09/Jun/2010 at 11:41am
A significant fall in gold price is not just a risk to earnings but to the very existence of the company. The following LTV related excerpts have been taken from Edelweiss report dated 27.1.10: After all the adjustments (for weight, purity, price etc), the average LTV offered by Manappuram on its outstanding loan portfolio is ~75% (~45% loans with LTV of 80–100%). The average maturity of this portfolio is 3-4 months. Keeping in view the current high speculative activity in gold, there is a definite possibility that gold might go the early 1980s way when it lost 40% of its value in just a few months and 70% of its value in 2 years. Any such movement in gold price will result in this company going bust. Hence, buying this company can only be a speculation on gold price, and certainly not an investment. For investment, much better alternatives (such as Shriram Transport Finance) are available that not only have a solid moat, but also no risk of a sudden permanent loss of assets. |
Posted By: CHINKI
Date Posted: 10/Jun/2010 at 12:30pm
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I will not get into what will be the price movements of Gold in the near future as it is not in our hands.
More than anyone, management knows the risk for their business. Accordingly they have a back up system to take care in the event of fall in the price of gold. If the price keeps falling down, there may be chances that NPAs would go up but it will never threaten the existence of the company. They are in this business for more than 50 years and have come hardway. Anyone who wants to invest in a company for investment, first thing he needs to have is, the confidence in the company management regarding integrity as well as their execution capabilities. If they don't have that, then it is better not to invest. While the entry barriers are not there for this type of business, but the trust, service, network and brand name developed over the years are definitely the moat for this type of business. Lot of chit companies came up during 90's from nowhere, collected money from the people on assurance of high rate of interest and finally ran away with the capital. So it is not easy to make the people to part with their gold belongings (emotional attachment) with unknown companies/people. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: Alok Bhola
Date Posted: 10/Jun/2010 at 12:35pm
Can you please provide details of this back up system. |
Posted By: CHINKI
Date Posted: 10/Jun/2010 at 2:53pm
------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: samkkaran
Date Posted: 02/Aug/2010 at 3:01pm
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I invested in Manappuram before a week or so after reading this thread. I was convinced by the business model and also the management sounds genuine (They are in the business for 50 odd years).
But what is the reason for the sudden upsurge in the share proces. I got it before a week or so when it was around 80 and now it is close to 115.
Any specific reasons for this?
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Posted By: CHINKI
Date Posted: 02/Aug/2010 at 3:17pm
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Company needed to funds to grow further. There was a board meeting on 24th July to discuss the modalities for the same when promoter has announced that he would be investing 100Cr in the company.
This is one of the reason why it has started to flying immediately from last monday. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: gautham
Date Posted: 02/Aug/2010 at 12:46pm
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actually there are three muthoot groups: 1.Muthoot bankers
2.Muthoot Paapachan group
3.Muthoot Mini Bankers.
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Posted By: gautham
Date Posted: 02/Aug/2010 at 12:49pm
| I feel there is still a lot of steam in this stock. Its a better buy than most banks. Considering india's demographics,population and micro nature of business they can sustain their growth for several yrs. The gold price isnt a cause for concern. When prices become volatile or take a dive, the loan disburse will also change in % terms for safety. I feel its a safe game. As regards the price of gold I dont expect any major change for next year or more expect fluctuations. This is only my personal view. In the long term gold has a long way to go. |
Posted By: CHINKI
Date Posted: 02/Aug/2010 at 8:23am
These companies belong to Muthoot group who are also from Kerala and bigger than Manappuram but not listed ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: deepinsight
Date Posted: 02/Aug/2010 at 10:59am
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http://profit.ndtv.com/news/show/manappuram-finance-aims-to-become-rs-50-000-cr-firm-in-five-years-86629 - http://profit.ndtv.com/news/show/manappuram-finance-aims-to-become-rs-50-000-cr-firm-in-five-years-86629
these guys seem ambitious ------------- "Investing is simple, but not easy." - Warren Buffet |
Posted By: chimak10
Date Posted: 03/Aug/2010 at 5:00pm
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What is the average loan size for this company.
Does anyone have any other research reports about this one.........emkay report talks big about 70% CAGR in 2010-2012 |
Posted By: chimak10
Date Posted: 03/Aug/2010 at 5:02pm
okay from page one i got this..........hmm is this still true? |
Posted By: manishdave
Date Posted: 03/Aug/2010 at 5:12pm
One of biggest market in Ahmedabad for loan against gold is students who wants to go abroad. They need to show balance in bank and not many ppl have that. After applying for visa they get money back. Money is never used except it changes bank statement. Muthoot is better known than Manappuram here. rate is 1.5%/month so spread is very good and very secure. Only problem is anybody can copy this model so spread should come down. First mover advantage won't have much of value uncles loan term is very long. I saw advt from HDFC bank for LaG. |
Posted By: chimak10
Date Posted: 03/Aug/2010 at 5:33pm
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The company’s borrowers belong largely to the lower or lower-middle classes. The typical loan amount
is between Rs 18,000 and Rs 25,000, taken for a period of no more than three or four months. “Surprisingly, this category has never been of interest to our commercial banks,” said Nandakumar. From there website ..........seems like this company keeps news about company link updated very well. Q: To me it sounds like a money lending operation. You take gold jewellery from people, give them for festival or marriage Rs 15,000 loans for 120 days – 30% - is there no law saying you can’t charge money like that? A: This gold loan is a small ticket business. The average ticket size is only Rs 18,000 and the average duration is only three-months. Q: So what are you taking as collateral? You are telling people come and leave your jewellery with you and what if gold prices go the other way and what if gold prices go the other way? A: If at all there is a downside fall we will call for the margin, but the thing is it being a short duration – three-month or so – it never happens. We are doing this business for the past several years from 1998 the company has started doing this business. I have now learned that kerala state is " Overbanked" |
Posted By: CHINKI
Date Posted: 03/Aug/2010 at 7:55pm
There is no entry barrier but no. of branches is important for increasing the AUM. It is not easy to replicate. As on date, Manappuram has around 1,300 branches. If someone starts today, they will need minimum two to three years to open so many branches. By that time, Manappuram would have gone ahead further. Banks cannot cater to this segment. Rural banks which were opened for serving rural people haven't done as per expectations. Today, lending against gold is around 1,50,000Cr business out of which 1Lac crore is in the unorganised sector. So you can imagine how much potential is there for the organised players. It can easily acomdate five to six players. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: chimak10
Date Posted: 03/Aug/2010 at 8:02pm
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Chinki sir where did you find this 1.5 lakh crore figure if you have then can you plz post the link.
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Posted By: CHINKI
Date Posted: 03/Aug/2010 at 8:07pm
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This is what the figure given by the Manappuram MD Mr Unnikrishan when I asked him about the competition. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: manishdave
Date Posted: 03/Aug/2010 at 8:33pm
As I said, they may be first movers and largest branch network. Their model is solid as far as NPA is concerned. But IMO there won't be much advantage of scale unless TV ad is very effective. But any local company can advertise in newspaper and is equally effective. When ppl see money they will crowd the space and rate spread will NARROW - ultimately. No doubt huge business out there and they will grow but ultimately what will help them maintaining the spread? |
Posted By: deepinsight
Date Posted: 03/Aug/2010 at 8:52pm
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Manappuram General Finance opens 78 new branches
Source: Equity Bulls ------------- "Investing is simple, but not easy." - Warren Buffet |
Posted By: deepinsight
Date Posted: 03/Aug/2010 at 8:54pm
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http://www.moneylife.in/article/76/7833.html - http://www.moneylife.in/article/76/7833.html
What makes gold finance companies shine bright?
The yellow metal’s phenomenal jump in valuation, steady interest rates and instant sanctions of loans, aided by the receding stigma of borrowing are driving more and more people to take this loan route
------------- "Investing is simple, but not easy." - Warren Buffet |
Posted By: CHINKI
Date Posted: 03/Aug/2010 at 9:31pm
Without any advertisement and branches, unorganised network still holds 2/3 of the total market and they have huge spread compared to even Manappuram. So please check out for yourselves how they do that? ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: hit2710
Date Posted: 03/Aug/2010 at 11:20pm
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If gold prices were to crash suddenly, could it hurt Mannapuram due to rise in defaulters? ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: deepinsight
Date Posted: 03/Aug/2010 at 1:34am
However, from what I understand, the company gives about 70% of the appraised value as loan.
Almost all the loans are of short duration( 3 months or less.)
NPA levels have hovered at miniscule levels in the gold lending business from many years.
So If gold value fell 30% in a very short time frame and many of the lenders defaulted enmass, the company would have a problem in its hand.
Even then, the company has the right under this scenario to recover its due by selling the collateral. (so the damage would be more contained)
------------- "Investing is simple, but not easy." - Warren Buffet |
Posted By: joslinjose9
Date Posted: 03/Aug/2010 at 4:56am
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muthoot group is one of the trusted business group in kerala.they are one of the sponsers of delhi daredevils. ------------- fear of lord is the beginning of wisdom |
Posted By: CHINKI
Date Posted: 03/Aug/2010 at 8:33am
The risk management strategy of MAGFIL is based on three pillars – HUJ, viz., Household Used Jewelry. If the collateral does not satisfy any of the three criteria, it is not accepted as collateral. Household (H) – The jewelry to be kept as collateral must be a household jewelry and not an investment. Hence, if a customer comes with ten bangles of the same make it will not be accepted as collateral. The household nature of the jewelry makes sure that the borrower repays the amount and takes back the jewelry because of the emotive value. Used (U) – The jewelry must be used jewelry as unused jewelry will have higher probability of theft attached to it and also will be for investment purpose and will not have any emotive value for the borrower. There are various methods to judge whether the jewelry is used or not like traces of sweat, use of nitric acid etc. Jewelry (J) – The loans are given only against jewelry and not against gold coins or biscuits. The whole business model of MAGFIL is woven around the emotive value attached to the collateral, which is not there in case of gold coins/biscuits etc. Also, the risk of collateral being tainted is more in case of coins/biscuit than in case of jewelry. Sticking to the principles of HUJ has helped MAGFIL to control its NPAs in the gold loans at level of just about 0.1% over the last five years. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: chimak10
Date Posted: 03/Aug/2010 at 9:28am
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Okay i am invested in this one.
Now i have one academic question.........say i want to see if the company not just this one but any finance company hiding it's NPA how can i tell.............what to look for in Balance sheet or P/L account? |
Posted By: CHINKI
Date Posted: 03/Aug/2010 at 9:33am
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If they want to hide, you know Satyam.
Promoter has bought shares in June or so around 2Lac and he is again investing around 100Cr in the company. So that way chances are less. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: chimak10
Date Posted: 03/Aug/2010 at 9:45am
| Thank you chinki bhai. |
Posted By: bihisello
Date Posted: 03/Aug/2010 at 10:07am
Is that a positive??? |
Posted By: CHINKI
Date Posted: 03/Aug/2010 at 10:23am
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Since they have been expanding in North, West and East of India, they would have thought Cricket as a medium for advertisement to get better visibility. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: chimak10
Date Posted: 04/Aug/2010 at 4:10pm
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Good amount of insider selling there wares
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Posted By: anthro
Date Posted: 04/Aug/2010 at 10:34pm
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Not convinced of "management integrity" on both manappuram and muthoot.
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Posted By: hit2710
Date Posted: 04/Aug/2010 at 10:39pm
There has to be more substance to this statement. I came across similar statements in the thread on parekh aluminex and look where the stock price is today. This is not to absolve the promoters, but it often creates bias and doubt in those reading the thread which might often be unfounded. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: bihisello
Date Posted: 04/Aug/2010 at 11:13pm
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Promoter integrity and stock returns are very often unconnected for longer periods than often expected!
Anyway, I agree that comments on promoter integrity (either way) should be substantiated. |
Posted By: CHINKI
Date Posted: 04/Aug/2010 at 8:03am
Or, what makes or reports which makes you to come to this conclusion?? Just wanted to get this as we are invested in this stock. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: chimak10
Date Posted: 04/Aug/2010 at 9:06am
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In course of my investing life i have learned to completely ignore this kind of blanket statements.
I came across while reading on the net that Muthoot is very well respected name in south plus Muthoot and manappuram both are not fly by night companies they are operating since very long time. Do know that the promoters fortune are directly linked with the share price of the companies. I did post about the insider selling but that is due to my nature. |
Posted By: CHINKI
Date Posted: 04/Aug/2010 at 9:16am
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True. People when they are accusing/making statement particularly about the integrity of the promoters, need to have some evidence.
Just that stock has moved up does not qualify to make such statements. Read this http://www.seasonalmagazine.com/2010/06/can-manappuram-keep-growing-at-60.html - interview which was posted earlier on page 4 to get a background of the promoter, his journey to reach this level and what he intends to further. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: shivkumar
Date Posted: 04/Aug/2010 at 11:10am
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Chinki, Please read http://www.suchetadalal.com/?id=ccac3a62-9b9f-9651-4c2b4486353a&base=sections&f - this article on Muthoot and draw your own conclusions. |
Posted By: CHINKI
Date Posted: 04/Aug/2010 at 11:38am
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I have forwarded that article to Manappuram.
Let us see what do they say about that. ------------- TOUGH TIMES NEVER LAST, BUT TOUGH PEOPLE DO |
Posted By: manishdave
Date Posted: 04/Aug/2010 at 11:46am
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There are hundreds of thousands of borrowers and thousands of employees doing lot of transactions. One such incidence does not make them poor governence. It could be and employee mistake. It does not make management dubious. If there are series of such cases, then there is problem with system. There was case of sexual harassment against Infosys. It does not translate as bad management at infosys. |
Posted By: bihisello
Date Posted: 04/Aug/2010 at 11:53am
Strangely no reference to that article in the subsequent one provided by deepinsight: http://suchetadalal.com/?id=e8a5ee8d-9222-bf86-4c5826ac04af&base=sections&f |
Posted By: anthro
Date Posted: 05/Aug/2010 at 12:36pm
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These are personal views and not a recommendation on the stock price.How stock prices move is anyone's guess.
Agree that Muthoot is today a big name in Kerala but disagree that its a respected name .Companies like Muthoot and Manappuram are what we call in kerala as "blade companies " - a necessary evil filling a void left by insensitive and unreachable banking system - but highly loaded against you if you are a hapless borrower.It might make sense to read the standard agreement which the customer has to sign to see how the dice is loaded against him.Such a business model where the customer generally lower middle pays such high interest rates can not be a symmetric growth story for all constituents.
This group is politically connected and also into property.The chairman had to pay a very tragic price with the murder of his son Paul Muthoot who was handling the property acquisition business - This case may not see the light of day with allegations of this being a political murder and so on.
Some details :
http://news.rediff.com/report/2009/aug/23/political-motive-behind-muthoot-scions-murder.htm - http://news.rediff.com/report/2009/aug/23/political-motive-behind-muthoot-scions-murder.htm
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Posted By: gautham
Date Posted: 05/Aug/2010 at 12:54pm
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I have known the Muthoot family for several decades. There is no doubt that they are neither fly by night nor fraudulent. They are very enterprising, aggressive and genuine. About investor friendliness and dividend payout, time will only tell. I do not know. But you can be assured of genuinity. Its a very diversified business house. I would rate them in the following order. The best one is the muthoot pappachan group (muthoot capital), very forward thinking, gets into the right businesses and popular. Next is Muthoot M George ( Muthoot finance). last in line is Muthoot Mini Bankers.
Manappuram is also known to me, but just know them thats all. They are popular in their area.
let me explain the business fundas in gold loans and the kerala finance market. Kerala is the state where the maximum number of finance and chit cos have gone beust. That was a trend around 20 yrs ago. Since then people have been wary. When you handover your gold you only get around 80 - 80 % of value. Therefore the actual value handed over is 100 + around 10 %making charge. Hence 110. You would not handover your gold to someone who might run away with 110 after giving you 80. Hence integrity and reputation are most important. Dont compare these two companies with any of those stupid listed shady finace cos on the BSE.
I expect the gold loan business to grow at a corching rate. notr just for the next few years but for many years to come.
They have millions of borrowers, one so called complainant and an ambitious journalist (sucheta dalal) will not change their fortunes. Its a one of case and could even be a local competitor playing foul to tarnish their reputation.
Muthoot pappachan, the founder was my grandfarther's friend and the present chairman Thomas John was my neighbour for several yrs.
To me, manappuram is a more sensible buy than say ICICI or HDFC or yes bank. We should see a far higher growth.
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Posted By: gautham
Date Posted: 05/Aug/2010 at 1:04pm
| Kerala has a conservative government job kind of mentality. They consider collecting interest on capital unethical. Its ony a matter of perception. They dont understand the role that a lender plays in the system and the simplicity that a pvt lender has to offer. |
Posted By: hit2710
Date Posted: 05/Aug/2010 at 1:34pm
Valid point if you feel for the poor people and we all do. But if these companies dont lend, then someone else will lend and do the same things. Have you ever thought about drug companies' fat profit margins? At the receiving end is usually a poor sick often non affording or as u used the word "hapless" patient. So does this make drug companies blade companies? All the companies are there to make profits and most of them strive for higher profits. We make more money by investing in highly profitable companies. So are we at fault? Nothing personal. Just a viewpoint.
regards ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: chimak10
Date Posted: 05/Aug/2010 at 1:55pm
Someone surely is offloading ....excess bonus or split shares or cause of the amazing rise???????.................. i also offloaded 
Will wait for some further decline. |
Posted By: bihisello
Date Posted: 07/Aug/2010 at 12:40pm
A Keralite couple I spoke to regard both highly. Any contract we sign is loaded against us, with broker, with builder, with bank. So nothing new here. |
Posted By: gautham
Date Posted: 08/Aug/2010 at 12:14pm
In micro financing the contract better be good. How else will they recover loans of 20 - 30,000/-. The borrower always has the option to go elsewhere. its not like banking where you have banks functioning like a cartel and moving against the borrower. This happens in india and around the world. Banks are the biggest cheats. However in micro finance the competition is local centric spread widely and disorganised. there are lenders with different permutations and combinations to offer. I will feel more secure investing in a co. with 100 % gold backup rather than some stupid bank run by some men in suits who use heavy jargons but eventually land up getting exposed in scams beyond our imagination.
manappuram is surely better than yes bank or no bank or icici.
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Posted By: Shadofax
Date Posted: 10/Aug/2010 at 12:44pm
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Where can I find the NIM for Mannapuram ? ------------- $ |
Posted By: bihisello
Date Posted: 16/Aug/2010 at 6:24pm
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Pretty bad views here on gold loan companies in Mumbai:
Gold loan companies and their murky underbellies http://suchetadalal.com/?id=7f428a9a-6b92-18b6-4c690929f2e6&base=sections&f Any Mumbai resident have personal experience pro or con? |
Posted By: aniljain
Date Posted: 16/Aug/2010 at 6:48pm
| Every small company grow with struggling. This are sign of struggler be conviced |
Posted By: chimak10
Date Posted: 16/Aug/2010 at 7:52pm
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Hmm very good article maybe if i had researched the company this way then i wouldn't have made the investment in manappuram. Hehe thank god. For that matter any company at all.
BTW Smallcap fund bought lots of manappuram. Now i guess all the small gold pawn shop i see around my area are in same condition as the reporter talks about with one guy doing the security and in one shop there are no guards at all. Plus with the small shop there is even less guarantee about the gold return and safety. So isn't big devil better then small devil. Plus all the borrower would keep complaining about the loans who talks good about the lenders!!!!! I guess lets rationalize that the company is trying to save money by having shobby office and less security   or beacuse of lack of customers.
Too many questions or we could just bet on the figures provided by the company and just believe that they are true. And they will do biz of 50,000 cr lets go into walter scholss mode and ignore fisher baba here Why would emkay research analyst lie to us about the good prospect about the company. 
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Posted By: chimak10
Date Posted: 16/Aug/2010 at 8:03pm
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Just one pic
Would anyone have invested in the company run by this hippy weirdos. http://www.museumofhoaxes.com/photos/microsoft.html - http://www.museumofhoaxes.com/photos/microsoft.html |
Posted By: bihisello
Date Posted: 17/Aug/2010 at 12:26pm
The magazine claims it is three-part series. If there is something serious wrong they should point out immediate instead of making long drama. So I think there is some fishy about this "serial". Also they seem to object to gold being collected back only from branch it was deposited and not from any branch as they claim companies offer. So this magazine expects gold deposited in Leh to be reclaimed in Kanyakumari? |
Posted By: manishdave
Date Posted: 17/Aug/2010 at 1:12pm
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lenders is a bad word and nobody likes they. Who will read if any article is praising lenders? There is some nonsense in this article and looks like it is written with bias. For example, "While Manappuram says you'll get the gold loan within a minute, its sales assistant says that you may get it probably in 15 minutes." Isn't it great if you get loan in 15 minutes? I would not care if they say you will get in a minute. Auto companies tell us about mileage. Do we get that? But don't we know that we will not get that? It doesn't make that business model bad. |
Posted By: prabhakarkudva
Date Posted: 17/Aug/2010 at 1:22pm
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Skepticism about a company is generally directly proportional to the returns.When these magazines start talking good things that'll be the time to get out.
------------- Take your chances and keep them in a box until a quieter time. |
Posted By: bihisello
Date Posted: 17/Aug/2010 at 1:34pm
same mag had no problem here... http://suchetadalal.com/?id=e8a5ee8d-9222-bf86-4c5826ac04af&base=sections&f |
Posted By: arunshah2k
Date Posted: 17/Aug/2010 at 7:04pm
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Also, what is wrong if the outlet is very simple with no A/C. Having a simple outlet keeps the cost very less, after all they are catering to customers who take loan of Rs. 20000 - 30000. And having a branch at a off location, keeps the rental cost very less. All this is good for the company and shareholders. Private Sector banks need to have their branches at prime locations and very fancy as they deal with huge corporate customers.
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Posted By: titu
Date Posted: 17/Aug/2010 at 7:43am
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[And having a branch at a off location, keeps the rental cost very less. All this is good for the company and shareholders.]
The branch should be located at a secured place. Otherwise gold jewelleries they keep will expose to rubbery, theft etc. We do not know what steps they have taken to guard the jewelleries. Off location is okey, provided they are properly provided with watch and ward facilities.
------------- An uncultured man blames others, a semi-cultured man blames all but a cultured man blames himself. |