Cycle ⭕
The more you know about the world, more you will know about cycle. Most of the things move in cycles.
I have been studying the Micro finance sector for the last four years. The feature of the cycle is very short. Last cycle, I noticed how it works. Boom and bust.
This time, I have been participating in the cycle.
AU small finance Bank.
First buy : 545.
Second buy: 650
I will share my understanding and observations through subsequent posts.
Not a recommendation. You will never order any meal based on my choice. For your money, never take any recommendations from any random persons.
The more you know about the world, more you will know about cycle. Most of the things move in cycles.
I have been studying the Micro finance sector for the last four years. The feature of the cycle is very short. Last cycle, I noticed how it works. Boom and bust.
This time, I have been participating in the cycle.
AU small finance Bank.
First buy : 545.
Second buy: 650
I will share my understanding and observations through subsequent posts.
Not a recommendation. You will never order any meal based on my choice. For your money, never take any recommendations from any random persons.
Cycle ⭕
MFI space is a heavily regulated space. A slight change in the gear can change the pace of the vehicle.
When RBI comes up with guidelines, it sets the path for growth or de- growth
A favourable condition of this space is higher liquidity in the system, and higher collection efficiency. NPA reduces, credit cost decrease and ROE increases.
The yield of this microfinance is on the higher side. So, the lending agency enjoys a solid profitability during upcycle.
On the down cycle, RBI will tighten the liquidity condition and set a lot of restrictions. Collection efficiency will go down. NPA will shoot up. ROE will hit rock bottom.
I will share various cases for you to track. Follow this post , and refer to the resources. You will learn how the sector changes its color from red to green to red again.
A beautiful but deadly cycle ⭕
MFI space is a heavily regulated space. A slight change in the gear can change the pace of the vehicle.
When RBI comes up with guidelines, it sets the path for growth or de- growth
A favourable condition of this space is higher liquidity in the system, and higher collection efficiency. NPA reduces, credit cost decrease and ROE increases.
The yield of this microfinance is on the higher side. So, the lending agency enjoys a solid profitability during upcycle.
On the down cycle, RBI will tighten the liquidity condition and set a lot of restrictions. Collection efficiency will go down. NPA will shoot up. ROE will hit rock bottom.
I will share various cases for you to track. Follow this post , and refer to the resources. You will learn how the sector changes its color from red to green to red again.
A beautiful but deadly cycle ⭕
Three times , I listened to this podcast till now.
First time , I just listened and couldn't capture much.
Second time onwards, I started collecting gems.
First time , I just listened and couldn't capture much.
Second time onwards, I started collecting gems.
For microfinance lenders, PAR 31-90% is a very crucial indicator to track the cycle.
Higher value indicates the lending space is under stress. When there is a reversal from peak to decline, it gives you early hints that the cycle is turning.
Higher value indicates the lending space is under stress. When there is a reversal from peak to decline, it gives you early hints that the cycle is turning.
Abbott India
I have observed the same thing playing out for this company. PAT growth is higher than Revenue growth.
For example, this quarter, Revenue is up by 8%. Profit went up by 16%. YoY
This is because the operating Profit margin expanded from 30.5% to 32.5%.
Since revenue growth and profit growth numbers are not very attractive, this will not make any headlines.
Hence, this share has not been multi-bagger since I own.
This stock is up by 75% (excluding hefty dividends) since I bought it. It's been more than 4 years. Many of you will start comparing with Nifty , Nifty Pharma and many other indexes and tag it laggard.
Most people miss one very big thing in this whole equation. The risk of FDA flagging and fire are not a concern for this business.
Next year, with good probability, I can say that Profit for this business will grow faster than Revenue growth. And PAT growth is of double digits.
I don't have to check or scroll through posts and be very vigilant about new breaking news. Relaxed compounding.
I have observed the same thing playing out for this company. PAT growth is higher than Revenue growth.
For example, this quarter, Revenue is up by 8%. Profit went up by 16%. YoY
This is because the operating Profit margin expanded from 30.5% to 32.5%.
Since revenue growth and profit growth numbers are not very attractive, this will not make any headlines.
Hence, this share has not been multi-bagger since I own.
This stock is up by 75% (excluding hefty dividends) since I bought it. It's been more than 4 years. Many of you will start comparing with Nifty , Nifty Pharma and many other indexes and tag it laggard.
Most people miss one very big thing in this whole equation. The risk of FDA flagging and fire are not a concern for this business.
Next year, with good probability, I can say that Profit for this business will grow faster than Revenue growth. And PAT growth is of double digits.
I don't have to check or scroll through posts and be very vigilant about new breaking news. Relaxed compounding.
Many of the concerns we had back on 2019, the similar line of concerns follows today also.
It is always great to listen to Rakesh Jhunjhunwala! Sharing an old interview.
It is always great to listen to Rakesh Jhunjhunwala! Sharing an old interview.
Must read
If not for investing, at least for knowledge purpose...
https://blindspotresearch.substack.com/p/who-actually-makes-indias-cancer
If not for investing, at least for knowledge purpose...
https://blindspotresearch.substack.com/p/who-actually-makes-indias-cancer
Substack
who actually makes india's cancer drugs?
only 20% of indian CMOs can make chemo drugs at all. owning that plant turns out to be the easy part.
Hi Everyone !
It's been some time since I have not been posting in this group.
I took some time out of the earlier timeline , and focused on personal life, and built a few good habits. Focus was to sharpen the skill, improve family relationships, enrich knowledge base and work on health.
Probably, I will try to post frequently. At least, I will try to do so.
I will post a series of audio to highlight the process and results. I believe in compounding any good thing for a long time adds tremendous value in life.
I hope my posts will help you to improve your journey in life.
It's been some time since I have not been posting in this group.
I took some time out of the earlier timeline , and focused on personal life, and built a few good habits. Focus was to sharpen the skill, improve family relationships, enrich knowledge base and work on health.
Probably, I will try to post frequently. At least, I will try to do so.
I will post a series of audio to highlight the process and results. I believe in compounding any good thing for a long time adds tremendous value in life.
I hope my posts will help you to improve your journey in life.
"There are people so poor that money is all they have."
— Josh Billings
The whole idea is to become rich 😊
— Josh Billings
The whole idea is to become rich 😊
A quote to begin with ..
Don't be afraid to make a mistake. Only ensure you make one that you can afford so that you may love to make another.
-
RJ
Don't be afraid to make a mistake. Only ensure you make one that you can afford so that you may love to make another.
-
RJ
Health is Wealth!
Health is the most neglected asset a human can own. You can change your car, but not this body. At least, in this life.
Here are five markers that can roughly decide if you are healthy.
Simple guidebook to start with.
Less than 5% population in our country will be able to pass all five.
1. Blood pressure below 120/80
2. HBA1C below 5.5
3. Waist size below 32 (men)
4. LDL cholesterol below 100
5. BMI below 25
I used to fail in No 1 and 2. I have worked on these for last two years.
Without medication, I fullfill all five now.
But it required a lot of hardwork and boring routine.
Here, I am not trying to brag up anything. What I am trying to share rather...
Find your weakness and work on it. If a simple person like me can do it, you can do it too.
Health is the most neglected asset a human can own. You can change your car, but not this body. At least, in this life.
Here are five markers that can roughly decide if you are healthy.
Simple guidebook to start with.
Less than 5% population in our country will be able to pass all five.
1. Blood pressure below 120/80
2. HBA1C below 5.5
3. Waist size below 32 (men)
4. LDL cholesterol below 100
5. BMI below 25
I used to fail in No 1 and 2. I have worked on these for last two years.
Without medication, I fullfill all five now.
But it required a lot of hardwork and boring routine.
Here, I am not trying to brag up anything. What I am trying to share rather...
Find your weakness and work on it. If a simple person like me can do it, you can do it too.
Microfinance Sector
Fusion Finance came out with a good result. Earlier, Muthoot Microfin , Satin credit care also came up with good set of results.
This sector is resurrecting from graveyard. It is a brutal sector. Both on positive and negative sides.
If you don't understand this sector, start learning. Do not try to invest without learning.
Observe and learn. This cycle is short and repeats. If you learn, you can play it for your lifetime. And can make a lot of money.
If you take a shortcut and look for names to invest, this is an assured way to loose money in this sector.
Fusion Finance came out with a good result. Earlier, Muthoot Microfin , Satin credit care also came up with good set of results.
This sector is resurrecting from graveyard. It is a brutal sector. Both on positive and negative sides.
If you don't understand this sector, start learning. Do not try to invest without learning.
Observe and learn. This cycle is short and repeats. If you learn, you can play it for your lifetime. And can make a lot of money.
If you take a shortcut and look for names to invest, this is an assured way to loose money in this sector.
Execution is the 🗝️
We know that simple things are building blocks of every success. But it is extremely difficult to follow simple things consistently.
Let's throw some examples
Wake up.. have a glass of water... Come to daylight..Walk for 20-30 min, preferably without using phone.
How difficult is that ?
Well, this is nearly impossible to follow this routine 30 days in a month.
Idea is simple. Execution is nearly impossible. Less than 1 percentile can do this .
In business, success is often simple to visualise. But execution is the most difficult part.
Take examples... What Indigo does is an open secret. Despite knowing it, others cannot execute.
Take recent example..
Two wheeler EV space, so many companies started with the ambition. See how many of them are doing right.
Now, we have LLM. It has never been so easy to learn a completely new sector. Look how many are actually learning. People want shortcut in every sphere of our life.
Well, there is no shortcut. Knowing the things to do is a commodity. No use. Unless you execute. Same old boring things. Day after day.
Execution is the key.
We know that simple things are building blocks of every success. But it is extremely difficult to follow simple things consistently.
Let's throw some examples
Wake up.. have a glass of water... Come to daylight..Walk for 20-30 min, preferably without using phone.
How difficult is that ?
Well, this is nearly impossible to follow this routine 30 days in a month.
Idea is simple. Execution is nearly impossible. Less than 1 percentile can do this .
In business, success is often simple to visualise. But execution is the most difficult part.
Take examples... What Indigo does is an open secret. Despite knowing it, others cannot execute.
Take recent example..
Two wheeler EV space, so many companies started with the ambition. See how many of them are doing right.
Now, we have LLM. It has never been so easy to learn a completely new sector. Look how many are actually learning. People want shortcut in every sphere of our life.
Well, there is no shortcut. Knowing the things to do is a commodity. No use. Unless you execute. Same old boring things. Day after day.
Execution is the key.