The company is a niche NBFC specializing in end to end MSME Supply Chain financing.
Backed by second generation of Gupta family of the APL Apollo group.
Due to unconditional and irrevocable corporate guarantee provided by APL Apollo, the company has received a rating of CRISIL AA on its long term debt.
Recently the company has issued warrants to its promoters to raise upwards of Rs. 120 crore.
Professionally managed company with board members having experience of HDFC Bank, Aditya Birla Finance, Kotak Bank etc.
Company partners with ‘Anchors’ (large/mega companies) and provides financing to their distributors and dealers.
Apart from the APL Apollo group, their client roster also includes Hindustan Zinc, Oppo, Vedanta, Parle Agro, Nivea, Inalsa etc.
Company is at a nascent stage with June, 23 quarter sales being 35 CR and with net profit of 16 CR. There is a long runway for growth. The current ROE of 7% should increase going forward.
Indian interest rates have peaked. Any decrease from hereon will be beneficial for the company.
Ace investors like Mukul Mahavir Agarwal and Ashish Kacholia hold minor stakes.
Risks:
Currently trading at a P/B of 4.5 so it is very overvalued. As a comparison, PB Fincorp backed by the Poonawalla Group which has a quarterly sales 20x of the company is trading at a similar P/B.
Stock price has been in consolidation since January, 23 and is likely to continue for another 6 months till earnings catch up with valuation.
The Gupta family took control of the company in September, 22. There is limited operating history. We need to track how conservatively or aggressively they hand out loans and collect them.
The price can drop 15-20% in the next few months so I plan to stagger and increase my stake.
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