Digitization & Demonetization: Has Microfinance Lending in India changed forever?

This is follow up on my previous post on how rural financing and lending in India have changed irrevocably due to Demonetization and Digitization.

Unfortunately in India, loans are expensive for the poor. The Public Sector Banks will not lend to the poorest outside of the agricultural loans and political sops. At the same time all other goods are subsidized for the poor because they are funded by public taxes. Continue reading “Digitization & Demonetization: Has Microfinance Lending in India changed forever?”

Rainbow of Links: Stuff I am Reading (Week of 3/11)

$74 Trillion Global Economy (Ritholtz Wealth Management)

48 Most Important Things on Investing – Howard Marks (Safal Niveshak)

D-Mart is a Wonderful Company but..  (Capital Mind)

The Logic for a larger Large Cap allocation (Morningstar)

How D-Mart’s Damani made 1800% gains from a Cigarette stock (Moneycontrol)

View: Snapchat IPO may be worth the valuation (Grey Enlightenment – Contrarian View)

Dominance and Gender (Pumpkin Person – Nice note on the evolution of Risk Taking)

Chinese Stealth Fighters enter service (TOI)

DCF : Deliberate Certainty Fabricating Model (ValueWalk)

NASA Finds India’s Long Lost Lunar Probe ‘Chandrayaan-1’ (ValueWalk)

Modi win could push NIFTY to an all-time high (ET)

Speciality Restaurants: Narrative Bias and the need for a focussed strategy

This post is not buy/sell/hold advice. Please see the disclaimer at the end before reading further

Speciality Restaurants Ltd, the owner of the popular Oh! Calcutta, Mainland China: Asia Kitchen and Hoppipolla brands is going through bad times.

2012 was its best year – when it went IPO. Things have tumbled downhill.


Continue reading “Speciality Restaurants: Narrative Bias and the need for a focussed strategy”

D-Mart IPO: Business Quality Premium or Smart Timing?

This post is not buy/sell/hold advice. Please see the disclaimer at the end before reading further

With all the hype around it, the D-Mart IPO sounds like a noisy baarat plodding through Dalal Street. The promoter of D-Mart is R. K Damani, who is a stock market heavyweight. The legend goes on to say that back in 1992, R.K Damani was shorting the stocks that Harshad Mehta was buying.

R.K Damani has since done the unthinkable: quit the stocks markets and entered the gritty world of retail business. Today Damani’s Avenue Supermarts, the parent of D-Mart, runs brick and mortal retail stores selling mostly Food and Beverage categories that generates 23% ROE.

Continue reading “D-Mart IPO: Business Quality Premium or Smart Timing?”

Investor behavior in India: Are stocks bought like insurance or as lottery tickets?

In 2016 I bought a health insurance policy.

Cover: 7 lakh; Premium: 7k.

I was already covered under group insurance offered by my employer. This health insurance was (and is) free, i.e. premiums are paid by my employer and not deducted from my salary.

I am relatively young, with no history of premature heart disease, diabetes or cancer in the family.

So why did I buy choose to buy more health insurance and pay 7k?

Enter Prospect theory to argue my stupidity.

Prospect theory states that losing a million dollars shrinks your heart more than making a million dollars swells your heart with happy feelings. In other words, our emotional brain sucks at math. Continue reading “Investor behavior in India: Are stocks bought like insurance or as lottery tickets?”

Microfinance : Demonetization. Budget. Beyond

The last few months have been testing for NBFCs in general. Demonetization was a black swan event that brought fears of a repeat of the AP Crisis in 2010 that served a near death blow to Microfinance in India.

On paper, Microfinance remains a fragile business model when compared to banks and depository institutions.


Borrow -> Lend at spread of 10-15%


Deposits + Borrowings (RBI, Bonds etc.) -> Lend at net interest margins of 2-5%

Without the cushion of deposits, an MFI must disburse what it borrows, and borrow more to grow its loan book. The cost of customer acquisition for MFIs is also higher than banks.

Continue reading “Microfinance : Demonetization. Budget. Beyond”

Rainbow of Links : Stuff I am reading

Asia’s Best Performing Stock Surged 8,811% in Three Years (Bloomberg Markets)

Demonetisation: A pause for sustainable growth of microfinance industry? (Moneylife)

Apple: The Greatest Cash Machine in History? (Aswath Damodaran)

Navi Mumbai Airport Plan Flies into Trouble (FT)

The Industry Cluster of Baddi Himachal (Outlook Money)

Bank of America opens branches without employees (Fortune)

Old Piece from the creator of the CAPE ratio: Markets have become more prone to bubbles

Old Piece: The Great Divide over Market Efficiency

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