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I am sorry guys, for not being regular in this forum.
I was silently watching posts on CIFL and had a look at the 31Dec12 financials.
1. Capital adequacy (risk weighted) has come down to 13.86% from 22.7% due to loss suffered in 2012. But this is above the required regulatory ratio of around 10%
2. Total loans, advances etc. are around 3 Bn, which is around 6 times of the total capital (550Mn).
For a financial institution, 6 times leverage is quite normal. The customer deposits are around 3bn. which explains that the leverage is by way of deposits.
They only have a bank OD of 88Mn. So for me, the balance sheet looks decent.
But the only problem I identify is their terrible asset/liability management. My guess from the financials is that, they are depending on short term high cost deposits to fund their long term fixed priced loans, which would have back-fired in 2012 due to abnormal increase of deposit interest rates. This has resulted in interest expenses exceeding interest income.
If the management properly understands this and put a better asset/liability management in place, for me, this stock at the current price is a buy on fundamentals.
I was silently watching posts on CIFL and had a look at the 31Dec12 financials.
1. Capital adequacy (risk weighted) has come down to 13.86% from 22.7% due to loss suffered in 2012. But this is above the required regulatory ratio of around 10%
2. Total loans, advances etc. are around 3 Bn, which is around 6 times of the total capital (550Mn).
For a financial institution, 6 times leverage is quite normal. The customer deposits are around 3bn. which explains that the leverage is by way of deposits.
They only have a bank OD of 88Mn. So for me, the balance sheet looks decent.
But the only problem I identify is their terrible asset/liability management. My guess from the financials is that, they are depending on short term high cost deposits to fund their long term fixed priced loans, which would have back-fired in 2012 due to abnormal increase of deposit interest rates. This has resulted in interest expenses exceeding interest income.
If the management properly understands this and put a better asset/liability management in place, for me, this stock at the current price is a buy on fundamentals.
. I can remember master blaster withdrew his money very early before the collapse of Golden Key and deposited in CIFL (Also promoted CIFL commercially) now CIFL is also in dangerous situation 
