SKS Microfinance Ltd IPO Message Board (Page 50)

capital adequacy ratio for FY'10 is 28.3% and not 40.0% (Mr. one idiot). Plz get your facts right and the RHP document is available in the SEBI website. Better you read it before commenting on with half information. Get well soon.

Many of the reports from broker firms represent the stock as subscribe.When given a comparison of SKS Vs EIL Vs Bajaj Corp i prefer this as compared to others. For SKS, With a GMP of around Rs. 60/- and a retail discount of Rs. 50/- not less than 100 bucks appears to be a listing gain to me.

I spoke to the company's help desk yesterday morning and they confirmed that the retail need to apply at full price of 985/- and post declaration of the issue price, the refund amount of Rs. 50/- would be credited back to my account along with the difference in the shares allotted to the shares applied. Picked their office number from RHP. For further doubts plz clarify with the company.

1) Yes raising funds...for MFIs is very diffucult and sks has not great reputation...yahhh right....you can say anything withouth facts...lol....now digest this:--

a)Bankers providing loans:-

ABN Amro, Axis Bank, Barclays,BBK, BNP Paribas, citibank, DCB, Dhanlaxmi Bank, HDFC, Indusind, ING Vysya, J&K, Karnataka, Kotak, South Indian Bank,Tata Capital, Yes Bank, LIC, SBI Life,....all these people fund them loans........What more reputation they need to raise funds.....

b)Individual Funders:
Bill and Melinda Gates Foundation
CGAP
Crystal Springs Foundation
Digital Partners
Ford Foundation
Grameen Foundation USA
Hindu Temple Society Of Capital District
Lekha Singh
MIT Poverty Action Lab
Ravi & Pratibha Reddy Foundation
Sandeep and Vidhya Tungare
Sanjiv Sindhu
Sreekanth & Sudhakar Ravi
Swiss Development Agency
The Echoing Green Foundation
The i2 Foundation
India Development Service
Maharashtra Foundation
Thunga Family
Ravinder Reddy & Bharat Bhushan
Late Sitaram Rao

C: Partners:

SIDBI, Bajaj Allianz,Sequio, Unitas, Sillicon Valley Fund

2)Gross loan portfolio as of March 2010 is 4321 crores...get your facts right sep 2009..is history.......so 750 crores...is easy to disburse........you know MFIs currently lend 20000 crores whereas current demand is 120000 crores....and is expected to cross 10 times in 5 years....so why cant they increase loan portfolio..so if they double loan portfolio as they have done it will be 9000 crore and they can earn pretax of 390 crores.....

3) Now interest of 20%:---If there cost of capital is 12-15% why will not they charge 20-25%....you know local money lenders...charge poor farmers 60%+ interest...so whats wrong in 20%..when they become bank...they will get funds at cost of 6%...i..e. the interest they will give depositors....and then lend to poor people at 10%...

guys....please guide....we need to apply at 935 or at 985 and discount(50 rs) would be refunded..?????????

i have 3 lacs where to apply

eil or sks or bajaj

CAR of SKS is more than 40% because its very difficult for MFIs to get money from market, so generally they have to deploy more owners' capital.

SKS does not have that reputation in market that it will get easy funding from Bankers all the time when required.

If a Company has a total pretax profit of 180 crores, that too after charging average rate of intrest @ 27-28%, u can assum what is its total loan book.

As per balance sheet of sep' 2009 its around rs. 2800 crores as on 30.09.2009

regards

yes profits came by raising funds through equity dilution....but how...they raised capital.employed it into business and earned profits.....that was one source of funds to scale up operations.......but they get there funding from 20 financial institutions and banks...they borrow...and then lend that is their business model....they also reinvest there ...profits to lend more......so whats wrong in that..........thats the whole mfi model raise money through loans from banks lend it and earn interest income.............and once they are listed they will apply for banking liscense........so then they will accept public....deposits to lend money.........how about that.....?....first understand business model...read its annual report you will understand business model............

and talking about deploying 750 crores....have you seen how much money they have deployed in loans,...what is total loan portfilio.....750 is piece of cake....they are also giving loans for micro housing now...that has bigger ticket size....in partnership with HDFC.....are you even aware what is micro housing and its potential....

Oh....and speaking about NPA levels there NPA in last 5 years...is 0.5%....i.e. less than 1%...so you mean to say all of a sudden....it will be high in the next 5 years.....and you know there is something called capital adequecy ratio.....that is it has to keep capital margin ratio of loans ....SKS has capital adequacy of 40%...do you know any bank in india....which has capital adequacy of 40% of total loans.....?

Again i am repeating....In MICROFINANCE MODEL....microfinance companies...raise funds from banks to provide loans to...people...and earn interest....

RPOWER
FCH
INDIABULLS POWER
NOW SKS

SKS = SUB KUCH SAAF

Dear All,

Profit comes from alloting shares at high premium is correct. This Company alloted shares at a hugh premium to investors and the money was received by the company in its bank account and the same was used in lendind @ 25-30% per annum resulting in growth of profit.

in this IPO also shares worth Rs. 730 crores will be alloted and the company will get intrest income by way of lending this money to villagers.

But beyond that whall will happen. Next year when, the Company will not be having any new share allotment, then it will not be that easy to grow at 100% pace. it will be a static earning share.

And also there are many risks also in this business. Its not that easy to deploy 730 crores easily @25% immediately.

Who knows, post IPO, 2-3 years down the line what will be the exact NPA level.

I am also not forcing anybody not to apply. Take ur informed decision. Check the balance sheet of the Company for fy'10. I dont have balance sheet of fy ' 10 with me, but i am very much sure the Company's share capital would have got increased because of heavy allotment of shares which got the company funds which resulted in profit growth.

in fy 2009 it self company got 350 crores as share premium which obviously was used for lending and resulting in good intrest income to the company.

as per prospectus details of securities premium account is :- (rs. crore)
2009 505
2008 147
2007 40

This model, any one can use. u keep putting extra money in your business and your profit will be increasing. Even earning per share will increase because new shares are issued at heavy premium to older ones,

Take informed investment decision. no one is asking any body to apply or not to apply. we all are putting our views which may or may not be acceptable to others


regards

Thanks Amit Kumar

at least...someone is arguing with facts on this blog....most are just cribbing about allotment to narayanmurthy...and unethical business....and kotak...i dont know what next illogical reason..they will come out against the IPO ?..some people just argue just for the sake of arguing...he he....no offence to any boarders

One Idiot
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You say:-any finance company will make money by lending/ borrowings only. i dont understand how will they grow thereafter beyond that. they will earn intrest and thats the only way for their income.

Reply: Dear, First know the business model and then comment on it.
SKS has a biggest network of untapped rural market.SKS MF is an excellent scrip with an awesome figures..The firm has been growing at a rate of 175-200% in terms of portfolio, member base, profits etc. since last 4 years continuously. There is a huge scope to be tapped by the company.The best thing is it has a link with 75L poor women which on an average totals 3 crore individuals (considering 4 individuals/family) linked to it. This is the biggest network by any company with the rural untapped market which can be utilised by any other company to link themselves with this untapped rural market.
Currently, the company is channelising Bajaj Allianz insurance product, an ICICI health insurance product, solar laltern, Housing loan with HDFC, Mobile with Nokia-Airtel, Metro cash and carry FMCGs etc. and many more.

This is boosting the profit multifold with almost no additional cost.
So, the future is just too bright for the company.

173 crores is pretax profit FY10 from loan disbursments. Loan disbursments doubled in 2010...who told you that profit comes from allocating shares...at high premium.....pretax profit is a component of shareholders fund added in balance sheet and if allotment is done to institution that adds to shareholder funds and general reserves and not in profit and loss ac......please dont create new accounting rules for christ sake....ITS LOAN DISBURSMENTS IS DOUBLING AND QUARDRUPLING EVERY YEAR...and ipo proceeds will not dilute earnings....

Bottomlie is if that is growth rate of earnings....why will not eps...double....from 2005 to 2010 even after equity dilution EPS growth....is 200% CAGR....

You know when traders..invest...there are lots of people along with them but when an investor invests...in a multibagger...he is isolated...completely isolated by people.....thats what Ramdeo agarwal says...

To your kind knowledge on Nov 2009 this year...i invested in a company which 9th largest MFI....CALLED SE INVESTMENTS....I SHOUTED AT MY CLIENTS TO BUY IT but no body did..I purchaed 1000 shares at Rs. 250 today it is worth Rs.1100 per share...it grew at cagr of 200% plus last two years and is targeting 850 crores revenue by fy11 i.e. 300% growth next year.....Anyways....i trust my investments....and this is the 4th IPO i applied in my life....coz i am very choosy.....

My first was Glodyne Technoserve in 2005....today it is 35 times price...and i still hold.....others were pantaloons...dlf..which i sold at 900...jubiliant...which i sold..at 380...and this is my fifth....so let me see if i am wrong in my analysis this time....

Anyways.....every body have their own argument.....after all.....there are both buyers and sellers in the market...without which..it will not work..one looses to the prosperity of the other..lol

Res. SETU Jain

i am sorry that i could not collect the fy'10 figures because i took the figures from Chittorgarh site.

profit grwoth of more than 100% is not possible because, last year's profit growth was due to equity infusion by FIIs and Mr.Narayan murthy at very high premium.

now they are charging extreme high premium but this will not go to the Company fully. Only 730 crores will go to the company and the rest will go to the selling shareholders.

this will create additional net profit of rs.170 crores post tax.

thereafter eps grwoth will be limited
pe will be more than 21 on expanded capital.


regards



still if we take fy'11 net profit to 370 crores

dear setu jain,we do agree all points we r going with ..SKS..O.K.

Oh another thing regarding P/BV of 5......well go and check on google finance .....all listed microfinance institutions around the world have valuations or share price of 8-10 times P/BV because there ROA is 30%...they demand 8-10 B/V....so on cmparative basis this one has reasonable....valuations...thats..why there is a saying.........Half knowledge is more dangerous than having no knowledge......

Net profit for FY10 is 178 Crore and at 200% CAGR is expcted to be even by conservaive stimates to be 370 (i.e. only 100% incrase and not 200%) crores next year...that translates to an EPS of 65 for FY11, At FY11 earnings it is 15 times and FY12 even if revenues grow just at the projected growt rate of sector for the next five years that is 70% CAGR comes to to be 118 EPS...i.e. 8 times FY12 earnings at price of 950 currently...so how is it expensive,,,,,at least dont put false numbers like 80 crores profit...that is not current profit....!!....And which promoter will be an idiot will provide you shares cheap when such growth rate is maintained...?.....

Anyways...people who do not want to subsccribe dont..but dont present misrepresetated facts to prove your point....

And whats wrong if they gave Narayan murthy shares at Rs 300...at that time profit twelve months trailing was 90 crores and EPS of 13...even he subscribed..22 times PE. and that too when company is unlisted... which asshole will apply for shares at 22 times in unlisted company if he does not know the prospects of the company.... and all these people cannot sell shares before 3 years...lock in....so nobody will sell on IPO..

What is this big issue about people given shares at 300 and 600....now say if it goes to 1200 after listing.....then will you say that they are greedy that they gave retail guys who applied at 950...and listing price is 1200 for people who did not apply in IPO....so i willl not buy at 1200 coz IPO was at 950.....i means thats hypocracy......argument without knowing fundamentals.....and forsigthedness.........

And talking about KOTAK being merchant banker and Uday Kotak a chor....his job is to give the best price for IPO to companies and companies fix price......They brought DLF indias first real estate IPO and it went to 900.....after that a flurry of real estate IPOs let real estate companies like unitech valuations to the roof...Uday Kotak can just underwrite...he doesnt gaurentee the ipo performance.....if he underwrites some company whose fundamentals are not goood...it is bound to fail....thats for you to decide...not him.....Indiabulls power was a bad company with bad management and in power sector that is anyways a dull sector.....anyways i am not defending him....but just because kotak is banker does not mean ipo will fail...

Which IPO is best???

316. ONE Idiot

Your concern is appreciable. Its financials for the last few might have impressed QIBs. Their tolerance level is different than you & me.

If market works based on fundamentals, it is easy to make money. QIBs may have some inside information that you & I don't know. It is zero-sum game.

Certain types of traders lime QIB / HNI / Operators derive non-monetary benefit (such as the thrill of gambling, or the risk management due to time-shifting funds, or just the cost of learning) from their monetary losses, which makes it positive-sum for those people. My concern is only the cash-in/cash-out aspects of market trading.

Retail investors (less informed) are necessary for the market to function efficiently, which seems to me a curious way to look at it.

Market situation is one participant's gains result only from another participant's equivalent losses. The net change in total wealth among participants is zero; the wealth is just shifted from one to another.

There is no regulator (SEBI) to come riding in and bail out the losers. Every Rupee that some investor wins in a stock market investment, some other investor lost -- or will lose. The stock market is also a zero-sum game like an evening of cards-game. There are many hands (many listed companies), many opportunities for individual wins and losses, but the bottom line is the bottom line: every Rupee of profit that any investor earns on the sale of stock was put into the market by another investor hoping to win. Maybe that investor won also, but sooner or later the sum adds up to zero. Like the card-player hand, every Rupee that goes in, comes immediately back out. Unlike card-game, people can't tell if they are winning or losing until they cash out. Unlike card-game, the hands overlap, so it's hard to see that each corporate stock is a single zero-sum game: when the company is finally delisted, every Rupee earned in profit is matched by another Rupee in losses. Except for brokerage fees, which are pure losses.

Some people try to argue that the value of the stocks reflects the net worth of the underlying companies -- which is often correlated -- while ignoring the fact that none of that stock price ever gets back into (nor out of) the company's bottom line. Other commentators agree that there is no connection while still arguing that it is not a zero-sum game. The fact is, the company profitability may go up or down, but the stock is still sold for whatever the next investor is willing to pay for it. The company net worth may figure in the buyer's thinking, but the money comes out of the investor's pocket, not the corporate bank account.

application rate kya hai
gmp rate kya hai

Hi
I am a complete IPO Addict. But for the last few cases, i have lost i half of my net wealth in ipos. so called good companies like, ibpower, jpinfra, hathway cable, shreeganesh jewellery are still in my portfolio.

but, i am so addict to ipos, that i cant leave an ipo unapplied. i will deifinitely apply for this ipo.

please guide me that whether i should apply in full or in small quanitities.

what is the maximum loss i will bear in a one lakh rs. application.

please dont take MY MESSAGE AS JOKE.