Micro selling

IDFC MF is trimming its holding in SKS Microfinance

SKS Microfinance has gained 33% YTD as against the Sensex's 2.3% slide. Over the last one month or so, the stock has gained 10% following the company’s strong Q4 results that were declared on May 4. The company’s reported PAT of ₹84.5 crore was up 108% YoY, while topline grew 70% YoY to ₹300 crore. Although analysts remain upbeat about the company and feel the stock can re-rate further from here, IDFC Premier Equity Fund recently sold 500,000 shares of the Hyderabad-based company for a sum of ₹31.57 crore. Morningstar data shows that scheme first started accumulating shares of the company in May 2014. The average monthly price of the share back then was ₹255. 

Today, the stock is up 2.6x from that price. IDFC Premier Equity Fund, which is co-managed by Punam Sharma and Anoop Bhaskar, though has not completely exited the counter. As per the disclosure made on the exchanges, the fund still holds 3,653,000 shares in the company. And even though the stock is trading at 4.3x FY17 estimated book value and 3.8x FY18 estimated book value, analysts believe the valuation is justified and can improve further given that the company’s earnings is expected to grow 42% CAGR over FY16-18.

The optimism also stems from the fact that while assets under management have grown 84% YoY, the company has managed to keep its asset quality in check. Sequentially speaking, the absolute GNPA was down to ₹4 crore in Q4 from ₹6.3 crore in previous quarter. Among other notable trading activity in recent days, Morgan Stanley sold 3,300,000 shares of JM Financial for ₹14.85 crore. International Finance Corporation, the private sector arm of World Bank Group, also sold 760,000 shares of SKS for a gain of ₹4.4 crore.