Strategy Series
Our articles specific to the six investment strategies we offer. Whether you invest with us or are looking to invest, these
articles can you give you an insight into why we make the decisions we make.
A Simple Approach to Valuing Financial Services Companies
Valuing lenders and insurance companies is tricky as the well accepted principle of discounting future cash flows does not work for Financial Services companies. These companies work under a regulatory framework which requires them to maintain a minimum capitalization level and also reinvest a large part of their earnings. Technically these firms have no/negative free […]
What KCP Lenders Can Teach SVB’s Management
Indian Lending: Gamblers versus Franchise Builders
Boring Companies Compound Profits At 20% p.a.
A Simple Approach to Valuing Financial Services Companies
Valuing lenders and insurance companies is tricky as the well accepted principle of discounting future cash flows does not work for Financial Services companies. These companies work under a regulatory framework which requires them to maintain a minimum capitalization level and also reinvest a large part of their earnings. Technically these firms have no/negative free […]
Apr 29 . 10 MIN READ
What KCP Lenders Can Teach SVB’s Management
Even as the global financial system is reeling from the stress created by the sharp increase in interest rates over the past year, the Indian banking system is well placed to overcome this crisis owing to its granular liability franchisee, well matched asset-liability (ALM) schedules and more calibrated monetary policy conduct by the central bank. […]
Mar 27 . 10 MIN READ
Indian Lending: Gamblers versus Franchise Builders
The Return on Equity (RoE) of lenders is driven by: (i) strong operating profitability (Return on Assets); or (ii) capital structure (high debt to equity). Recent euphoria in share prices notwithstanding, most PSU banks suffer from weak operational profitability (RoAs of 1% or lower) and high debt to equity ratios (15x+). This deadly combination is […]
Feb 26 . 7 MIN READ
Boring Companies Compound Profits At 20% p.a.
Investors who’ve studied Warren Buffett and Peter Lynch know that so-called “boring” stocks can turn out to be great investments in the long run. In India, a few lenders have been able to perform consistently across cycles. However, this also makes them prey to cycles where share prices don’t tend to follow fundamentals as investors […]
Jan 23 . 8 MIN READ
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