SKS Microfinance Ltd IPO Message Board (Page 47)

India’s estimated demand for micro-credit was
Rs2,40,000cr in 2008 (Intellecap). By FY2010, Self Help Groups and MFIs had
outstanding portfolio of just Rs45,200cr, indicating more than 80% unmet demand.
SKSMF is India’s largest MFI, having increased marketshare from 2% to 10% over FY2007-10. In an industry growing at 30%+, larger MFIs like SKSMF to further gain marketshare on the back of scalable best practices and cheap capital(at
70% CAGR over FY2011-12E, SKSMF's marketshare would stand at 14.3%).


FORWARD LOOKING STATEMENTS:---

Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
NII 264 495 868 1,246
% chg 214 87 75 43
Net Profit 80 174 298 426
% chg 381 116 71 42
NIM (%) 12 13 16 15
EPS (Rs) 14 27 41 59
P/E (x)* 70 36 23 16
P/ABV (x)* 8.5 6.6 3.7 3.1
RoE (%) 18.5 21.6 20.7 20.4

@394.Just bcoz something has happened in Kolar it doesnt mean all over India the samething is being followed. Further loans r given to women and there r criterias for providing loans.also the loans r unsecured. I have gone through the complete RHP and I have also visited areas like WB, Karnataka, AP. I am aware of the facts.

390@JAG.. U may go for it. After all the BRLMs are kotak.ahahaaaaa...Anyways even I havent gone through the RHP.Let me sit tonight and analyze

Mr.Ravi Bangalore - Keep up your good work. I am one of your keen follower

391. VC

I have alread said they charge lesser than money-lenders. However, interest is high. Kolar is my neighbouring district. I know some villagers from that part. They don't lend to some community, police, lawyers, conductors & to people of some areas marked hyper-sensitive.

They lend to purchase house-hold articles. While lending personal loan, they don't check the purpose of loan. You better check-up facts & be clear.

It will sail through as it is large issue & QIB appetite is there. Its performance on browses could be compared to StanChart IDR.

There could be 10% of the cases where money could be utilised for non income generating purposes. But what microfinance companies are doing is great good to the society at large. Had these Microfinance companies not lent money for the poor they would have borrowed money from greedy moneylenders who charge interest @ 60% p.a. (yhis I have witnessed on my own in a tier-2 town). I think over a period of time the interest rate charged by Microfinance companies would come down due to intense competotion.

@376.Chk my message. Now its a fact that SKS IPO subscribed over 10.51 times over all and more than 20 times in QIB. Still monday left for retail.Superb!!

@381 Ravi has gone mad. micro finance institutions doesnt lend money for purchase TV or for any dowry purpose. and when it comes to interest rates the MFI r far better then moneylenders.

Can anybody let me know between SKS and Bajaj which IPO should I apply for????? I've made some reserach on SKS but not on Bajaj, PLEASE LET ME KNOW.

SKS KA BHAV 985 VERY HIGH.LOOTNE KI PLANING ACHI HI,AT THIS COST NO OF SHARES WITH GOOD EPS AND PE IS AVAILABLE IN SECONDRY MARKET.WHY DO ONE INVEST IN SKS.

QIB 21 times overall

EIL QIB was 24 times
means EIL had a better response as compared to SKS

385. amit

In my house we subscribe ET, BL, BS, FE, Outlook Profit & Outlook Money, Mint, Financial Chronicle besides Economic Times.

In addition, as usual Kannada dailies & magazines.

This analysis is combination of all including info from RHP.

385.amit u r correct....google make our life very easy and lesy also...here all r using this ctr C and ctr V.

@384

For such EXCELLENT ANALYSIS.. You need not be banker Dear..
You should Only Know "CTRL + C" and "CTRL + V" after doing a Google..

RAVI-381: EXCELLENT ANALYSIS. IT SEEMS YOU ARE A BANKER.

SKS MICROFINANCE LIMITED - NSE Bid Details                        
Updated as on 30 July 2010 at 1500 hrs                        
Sr.No.      Category      No.of shares offered/reserved      No. of shares bid for      No. of times of total meant for the category
1      Qualified Institutional Buyers (QIBs)       7052464      99644818      14.13
1(a)      Foreign Institutional Investors (FIIs)            85308188      
1(b)      Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies)            8460004      
1(c)      Mutual Funds            5876626      
1(d)      Others            0      
2      Non Institutional Investors      1679157      120533      0.07
2(a)      Corporates            0      
2(b)      Individuals (Other than RIIs)            15778      
2(c)      Others            104755      
3      Retail Individual Investors (RIIs)      5037474      377538      0.07
3(a)      Cut Off            253022      
3(b)      Price Bids             124516      

@365. saharanpuri
Can you please post what is EquityMaster's View on EIL

P/E 38.18x FY 10. PAT grown at 119% last fiscal.

Compared to Banks and Finance Companies & NBFCs it seems expensive based on all valuation parameters like P/E, Dividend Yield and P/BV basis. However, gross revenue of the SKS Microfinance has grown at a CAGR of 176% in last four years ended March 2010 while net profit has grown at a CAGR of 223% over the same period. The high asking valuations are based on this high growth rates. The book value will come-down post issue mainly on account of IPO premium collected. Given its size, the present institutional investors, the recent growth and prospects going forward and the fancy towards the sector, the issue could still give some listing gains.

CONCERNS

The average cost of acquisition of shares by promoters is less than Rs50/-.

It has issued shares in the past 15 months to private equity investors @ Rs.300 per share.

Even after the IPO, the pre-IPO shareholders will hold nearly 77% of the post-IPO equity. This would entitle them to 77% of the net worth. 77% will be owned by pre-IPO shareholders who have contributed in the past one to three years just an average acquisition price of Rs 24.54 to Rs 137.53 (promoters) and up to just Rs 300 for non-promoters.

Another related fact is that out of the total issue size of 1.68 crore shares, more than half or 55.7% shares are put on sale by Sequoia Capital. Investors are going to contribute to the profits of pre-IPO shareholders, especially Sequoia Capital. Sequoia Capital average acquisition cost is Rs 61.18 only and they have been allotted shares in 2007 and 2008 in three tranches at Rs 49.77,Rs 70.67 and Rs 103.91.

Earlier in February, SKS Microfinance's founder and Chairman Dr Vikram Akula sold 9.45 lakh shares at Rs.636 per share to Tree Line Asia Master Fund (Singapore) Pte. The price is 55% premium. Looks like this IPO is exit route to them. The IPO of SKS Microfinance will make the promoters, and other venture capitalists including some private equity funds that have stakes in these companies, millionaires.

According to the DRHP, the key management of SKS Microfinance has decided to sell their stake in the run-up to the IPO under both stock option and stock purchase plans at a significant premium. This raises a larger question of commitment on the eve of an IPO.

Unethical business model. They are lending money for buying a TV or pay dowry. Growth being fueled by healthy profits could result in defaults as competing micro lenders give too many loans to poor borrowers who can't repay them. It’s sub-prime all over again.

Suresh Gurumani - Managing Director's salary is Rs.12.25 lakhs & taken Rupees one crore bonus in 2009. Dr Vikram Akula's salary Rs.1.8 crore p.a. These people are trying to eradicate poverty!

The country’s largest micro financier is exploiting the poorest of the poor in rural India in the name of providing credit access to them. The company charges interest between 27%-36% p.a. on money lent to the poor. The promoters are being profited at the cost of the hapless poor, down trodden and other weaker sections of the society.

A bigger risk is the unusual credit risk involving mass defaults by borrowers. A decree issued by some religious leaders to not pay-back the loans taken from MFIs caused mass defaults in Kolar District of Karnataka last year.

RBI has pulled up MFIs for their high interest rates -- about 25-27 percent. That is about double the rate at which they borrow from banks, but still lower than moneylenders.

Protests were also staged in Andhra Pradesh against MFIs. Such instances could become more common as MFIs scale-up their operation unless they lower their charges.

The Andhra Pradesh government has constituted district level ‘Task Force Committees’ (TFCs) to investigate the unethical practices of micro finance institutions in the state. The committees were constituted after the government received many complaints against the loan shark practices adopted by some leading MFI’s of the state.

The initiatives taken by the Public Sector Banks – for financial inclusion will make the presence of MFIs in rural areas irrelevant in the next couple of years. Government is bound to regulate the interest rate in favor of the beneficiaries, which will make these kind MFIs redundant.

EIL VS SKS - HOW TO TACKLE THESE 2 IPOS ????

EIL :
COST TO RETAIL = 275.5
TIMES OVRSBCRBD = 2.5
PRICE AT LISTING = 290-295
GAIN PER 1 LAC APJCN = RS 2700

SKS :
COST TO RETAIL = 935
TIMES OVRSBCRBD = 2.5
PRICE AT LISTING = 1040-1050
GAIN PER 1 LAC APJCN = RS 4800

IN BOTH THE IPOS LISTING EXPECTATIONS ARE ON MODERATE SIDE THAT LISTING PRICE IS VERY MUCH POSSIBLE IF MARKETS REMAINS IN SAME MOOD TILL THEY LISTED.

EIL HAS MORE RISK TO FALL TOWARDS ISSUE PRICE TILL U GET THE SHARES IN FPO, GOOD CO BUT NOT TOO EXCITING BOTH IN TERMS OF BUSINESS AND VALN, PAST TRENDS IN GOVT FPOS/IPOS INDICATE LOWER GAINS.

WHEREAS SKS INSPITE HIGH VALN, THOUGH NOT HIGH IF U COMPARE GLOBAL MF COS, HAS VERY VERY EXCITING BUSINESS MODEL, DIFFERENT TYPE LIKE JUBLIANT, COX ETC.IT WILL COMMAND GOOD SCARCITY PREMIUM POST LISTING BECAUSE THERE IS NO SUCH CO LISTED EXCEPT SE INVST WHICH IS TOO SMALL FOR FIIS.

TAKE DECISION AS PER UR HEART AND MIND AND GO FOR THE KILL.
DONT CONFUSED MUCH IN RATIO OF ALLOCATION BETWEEN EIL AND SKS LIKE ME, MY FINALS ALLOCATION IS STILL IN DILEMA.

What will be market capital of SKS after IPO?