SKS Microfinance Ltd IPO Message Board (Page 48)

As I am working in a MFI, I can say MFIs will have great future as it covers underpreveleged society of the country. Someone wrote that MFIs charging interest on their 30% to 40% per annuam which is high compare to nationalized banks. Do you think rationaly, whether our Urban and rural poor families can able get loans from nationalized banks? anwer is no. Currently these families borrowing from money lenders who charge 60% to 200% per annuam and using physical force to recover their money. MFIs are for better than these money lenders. These families are slowly learning financial literacy through participating in systematic lending model of MFIs. MFIs also took steps to educate customers on financial principles and client protection. RBI is also monitoring these MFIs and forcing them to implementing fair practice code. One more advantage from MFIs is, these poor people are slowly graduating into mainstream finanical services.

I too agree that SKS overpriced its issue, bidders may not get too much from listing gains but better stock for long term.

PLEASE GIVE THE COMPLETE FINANCIAL RESULTS OF LAST 5 YEARS.ALWAYS GIVE THE RESULT OF LATEST QUARTER i.e.30/06/2010

There is nothing surprising abt 11 times subscription of EIL, as yesterday was the last day for QIBs. Based on this number the retail wud psychologically change their mind i wud end up applying.I bet the same wud follow for even SKS. Today being the last day for QIBs in SKS, even this wud get oversubscribed. Just watch......

ARE DEAR INVESTOR ITNI ACCHHI COMPANY ME KYU INVEST KAR RAHE HO JISKA KUCH ATA PATA NAHI HAI AAPKO USASE ACHA EK KHARAB COMPANY DEKHO JAISE IDFC YE TO BHI AAPKO KHUSH RAKHEGI NAHI TO HOGA EK NAYA CHAMATKAR DISCOUNT ABHI 50 RS DE RAHE HAI BAD ME SHARE MIL SAKTA HAI 500 RS DISCOUNT ME

@374 bolo ta ra ra
First of all why dont you comment in your original name & stop taking shed of these fancy names.
In India people dont want to use thier own mind rather they want regulater to safe guard them. Ya regulater is needed so that retail investors can be safeguarded from insider traders but it is not easy to find them.If u think SKS is overpriced then you should not apply it does not mean that SEBI should have control on prices. If SEBI comes forward to control prices then no company will prefer to bring IPO's n FPO's which will in turn deter all the primary market.
In this competitive market everyone is allowed to set thier prices it depends on people they are willing to take or not.
Its a simple economics rule if we take Supply stagnanet Price increases with demand n viceversa

LOKESH G,
plepole blame b'cause if there is a regulatory body called SEBI, it should have controls over pricing as well. If it justs pass the drhp on the basis of set rules, then who made the rules. rules are also made by sebi. sebi should make such rules that extraordinary highpricing becomes impossible for the companies.

but sebi generally makes rules which are of no use. it made credit rating mandatory but what happend. but this credit rating is not linked to ipo pricing. any company whose shares are given 4star rating tries to price its shares 2-3 times its actual worth and investors regret later after relying on that rating.

SEBI should take all necessary steps and make/ change rules if neccsary to protect investotrs b'cause its SEBI's job and any failure will be blamed to it only.

abe chatur ramalingaam from 3 idiots (359),
itna kyon pareshaan ho rahe ho.

jab reliance power ne 10 ka share 430 main dekar niveshakon ke saath "chamtkaaaaaaaaar" kiya to kyon nahi chillaya.

jab india bulls 30 ki cheej 45 main de kar niveshakon ke saath "chamtkaaaaaaaaaaaar" kiya toh kyon nahi chillaya.

aaj bhi niveshak jab roj subah news paper main apne IPO ke shares ke bhav dekhate hain, to unake saath roj "chamtkaaaaaaaaaaar" hota hai.

aaj bhi rpower, ibpower, FCH, etc kitaney hi shares hain jinhe dekh kar bechare investor ke saath har roj na jaane kitani baar "chamtkaaaaaaaaar" hota hai.

EK BAAR AUR "CHAMTAKAAAAAAAAAAAAAAR" SKS KO KAR LENE DO.

KYA FARAK PADATA HAI

I dont know why people are blaiming SEBI
SEBI only clears IPO according to set rules. It does not have any role in pricing. People who do not have any knowledge abt the markets only blaim SEBI n misguide others

APPLY in full power in ENGINEER.
rest of the money can be used in sks, bajaj and prakash steelage

overall 9 times qib 17 times. EIL looks very hot now. data till 3.45 pm. EIL must apply. Apply in SKS if u are able to sell in grey otherwise avoid.

RETAILERS, dont miss EIL by misguidance of so called experts, tv channels etc. check the balance sheet and than apply.

How come two different rating agencies have rated them at 2 and 4. This gap is big for a 7 year old company.

SKS IOP
AAP KE PAAS BAHUT PAISE HE TO AAP KHU NAI FINA. CO KA IOP NAHI LATE,

EXECUTION NOBLE HOUSE SAYS AVOID ON SKS IPO

For the biggest MFI in India, concerns remain on credit costs and finacial leverage.

SKS has announced the final pricing range for its IPO at Rs850 to Rs 985 per share. We think these are punchy valuations even at the lower end implying a 5.8x FY10 P/B (pre money) and 3.8x FY10 P/B (post money). Whilst global microfinance peers tend to trade at a higher multiple, those have significantly higher return ratios (30-40%) compared to SKS’ FY10 RoE of 21%.

Clearly, the valuation factors in expectations of significant RoE expansion in the future to which we see challenges from : a) Competitive, political and regulatory risks to yields b) Credit costs already at a low of 0.5% to 1.5% in the past three years could rise c) Limited operational and financial leverage. Whilst we acknowledge SKS as a strong business exposed to a huge market opportunity, valuations do not factor in these risks.

SKS Microfinance is the biggest micro-finance institutions in India with 20% market share amongst organised players. Given that micro-finance institutions are currently catering to a mere ~8% of the potential market, there is a huge market waiting to be tapped.

However, increased competition, the possibility of regulatory and political interventions and lack of operating and financial leverage in the business model leaves little scope for return ratios to expand from here:

• Pressure on yields going forward: The yield on advances for SKS has been in the range of 25-28% over the last three years. However, the yields can come under pressure going forward as competition is rising with more players are entering the market (two prominent MFIs recently decreased their interest rates). Moreover, the authorities are not happy with high interest rates
charged by MFIs (25%-35%) and the possibility of the RBI or state governments capping the interest rates charged by MFIs cannot be ruled out.

• Credit quality can worsen: Whilst credit costs for SKS has been in the range of 0.5%-1.5% over last three years, it can deteriorate going forward to more than 2% due to: a) increased competition in the sector (multiple borrowings by clients beyond their repayment capacity); and b) expansion into new geographies. Globally, the average credit costs for the sector have been in 2%- 5% range. Moreover, the bigger risk for credit quality comes from instances of mass defaults (e.g. Kolar incident in India) which have plagued the microfinance industry the world over.

• Limited operational leverage in the model: Whilst cost to income ratio of SKs has come down from 79% in FY07 to 52% it is primarily driven by increased loan ticket size rather than operating leverage in the business model. Unless SKS increase its average ticket size per customer (which might have an adverse impact on credit quality), we do not see leverage economics working in SKS model because of large administrative and employee costs associated in reaching out to the customer base. A look at global microfinance companies show that cost to income ratio of these companies has been in the range of 45% to 55% (SKS is currently at 52%).

• Financial Leverage to remain low: Whilst the company management claims that it can leverage up to ~7.0x (currently at 3.8x) and hence enhance ROE to 40% going forward (currently at 21.5%). We are sceptical that company would be able to leverage more than 5x as regulators and bankers might not be comfortable with high leverage given the inherent risk in the business model.
Even globally micro finance companies have been leveraged less than 3x because of the higher capital adequacy required by regulators and bankers. Hence on a best case basis we do not see ROA for SKS going beyond 6% (from 5.4% in FY10) and ROE beyond 30%.

EQUITYMASTER SAYS AVOID ON SKS IPO

The microfinance sector is dependent on outreach to rural poor to provide them financial services. The sector’s main aim is financial inclusion and alleviation of poverty. Unlike other sectors, a financial institution's asset is cash and the ability to grow interest income (topline) and is therefore, largely dependent on its capital base (or net worth). Therefore, as compared to the price to earnings (P/E) ratio, the price to adjusted book value (P/ABV) is more relevant while valuing a banking or non-banking financial company (NBFC) stock. By P/ABV, we mean reducing net non-performing asset from the net worth and then, dividing it by the number of shares. We have chosen to value the company on the price to adjusted book value multiple due to its NBFC structure and considering the fact that the incremental capital being raised is primarily to be invested in the lending business.
The stock is valued between 3.5 times and 4.1 times its post issue book value at the lower and upper end of the price band respectively. It is trading at a premium when compared to some of its NBFC competitors Shriram Transport and Mahindra Finance, even though its fundamentals are competitive to that of its peers. Investors also need to recognize the fact that the risk of micro lending is far more pronounced due to the small ticket size and uncollateralized nature. We believe that that the issue of SKS Microfinance looks overvalued at this juncture as it does not offer any margin of safety in terms of valuations. As such, we recommend you to 'AVOID' the issue.

apply for long term.

reason- in the next ten years the share price will be less than issue price so you will have to keep this for long term

is IPO main SEBI aur SKS dono mil ke niveveshako ke saath saamuhik "chamatkaar" karenge

kripiya kar ke apna dhan inhe de de

SEBI = SAALE EKDUM BE IMAAN
SKS = SUB KUCH SAAF

is ipo main niveshak apna "dhan" ek "chamtakari" company ko de de jo niveshako ke saath aane waale samay main "chamtkaar" karti rahegi.

Isliya SEBI ka BALATKAR hona CHHHIYE- 3 IDEOTS

SEBI ne niveshakon ke saath already bahut "chamatkaar" kar diye hai. humain to ascharya hota hai ki koi ek jeewan kaal main itane "chamtkaar" kaise kar sakta hai.

agar niveshak nahi sudhare to usake saath aise "chamtkaar" hote rahenge.

niveshakon ko apna "dhan" sebi dwara aprroved sks jaisi companies ko de dena chaiye jo niveshakon ke saath baar baar "chamtkaar" karti rahegi