A very happy new year to all of you. My first post this year is about an interesting opportunity for which I would not like to give any targets. That I would leave all of you to decide upon. If you ask me I would be happy to take a personal loan @ 15% pa for a 3 year period and invest in this script.
Current price: Rs 351.45
Price target : Atleast 5 times
Time period : 3 years
So what is the company into. It is into microfinance. I leave it to the readers to find out what microfinance is the kind of opportunites it presents. (type microfinance india on google). This time round I am also not going to give to you the financials of the company. That is because the opportunity that this company presents to you will not be contained in the financials but the business model of the company which revolves around the concept of microfinance. Please visit SE investment site
So what makes me convinced enough to say that its a multibagger. Yes the financials show an increasing trend. The revenue and net profit growth is superb. But the most fascinating thing is its plans. No it has not revealed anything as yet but going by what it has spelt out in its EGM documents the plans should be huge. Going by the EGM documents and my experience in the corporate world it has huge capital raising plans. And am sure you would agree with me that unless the management has confidence on the business model such large expansion would not be thought of.
This is what it is going to do. It is increasing its Authorised share capital from Rs 8.50 crores to Rs 125 crores. Now raising the authorised capital cost money. As per todays rates it would cost Rs 0.6 crores.
They have called an EGM on the 15th of January 2009 to get shareholders approval for the same. My hunch is that very soon there is going to be announcements of how the money will be raised. Since the business is about lending money so more the money better it is. So ideally 10 times more money should lead to 10 times more profit in the years to come Lets see if my hunch is correct.
