What is Microfinance?

 Microfinance is a source of financial services for

entrepreneurs and small businesses lacking access
to banking and related services.
 The two main mechanisms for the delivery of financial
services to such clients are: (1) relationship-based banking for
individual entrepreneurs and small businesses; and (2) group-
based models, where several entrepreneurs come together to
apply for loans and other services as a group.
 microfinance is a way to promote economic development,
employment and growth through the support of micro-
entrepreneurs and small businesses.
 BHARAT FINANCE
 Bharat Financial Inclusion Limited (formerly known as
SKS Microfinance Limited) BFIL is a non-banking
finance company (NBFC), licensed by the Reserve Bank
of India.
 It was founded in 1997 by Vikram Akula, who served
as its executive chair until November 2011.[2]
 The company's mission is to provide financial services
to the poor under the premise that providing financial
services to poor borrowers helps to alleviate
poverty.[3][4]
 In 2013, the company operated across 17 Indian
states.[5]
 SKS Microfinance offers life assurance and a variety of financial loans – Income
Generation Loans; Mid-Term Loans; Long Term Loans; Loans for purchase of
products like cook-stoves, solar lights, water purifiers, mobile phones, bicycles and
sewing machines; and loans secured on gold jewellery.[13]
 The company lists some of the social benefits of its financial product and service
offerings as "providing self-employed women financial assistance to support their
business enterprises, such as raising livestock, running local retail shops
called kirana stores, providing tailoring and other assorted trade and services."[13]
 Their minimum ticket size is Rs.18000
 Majority of its business is cash based. Collection efficiency on 2 week lag basis is
97%,while on 1 week is 93%.
 Most of the borowwoers deal in small consumption items like groceries they are
able to repay in 100Rs notes.
 Not involved in individual loans.
 Core business to provide small value loans and other basic financial services to its
customers who are loacated in rural areas.
 Customer base of 5m with 1000 branches.
 Linked its credit systems to the national database to speed up cheaper financing to
those at the margins.
 Have 66 lakh customers across one lakh villages in 16 states.
 Ujjivan Financial is one among its peers.
 They reported a loss of 11.87% to Rs 42.81 crore.
 Market cap: Bharat Finance:- 11,142.81 Ujjivan:- 5873
 Sales turnover : 1,169.13 , 1,007.25
 Net Profit : 302.98 177.22
 Total assets: 4,296.05 , 2,931.96
Trend analysis
 Support at 20-day moving average .
 Levels at 800-810
 Buy on dips
 1st resistance of 870, 2nd 920
 Guidance
 Management has guided to disbursements of INR33-35b in 4QFY17 Management expects 35-50bp
benefit to cost of funds from MCLR cuts by banks to accrue over the next 1-2 quarters
 .The company does not intend to pass on these gains to the customers as they already offer the lowest
interest rate in the industry and also are making spreads reasonably below the 10% threshold as
mandated by RBI.
 Ratio analysis
•
The book value of a company is the value of a company's assets expressed on the balance sheet. It is the
difference between the balance sheet assets and balance sheet liabilities and is an estimation of the value
if it were to be liquidated.
•
The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to
compare the market value, or what they are paying for each share, to a conservative measure of the value
of the firm.
•
Price/BV : Mar 16 5.02 Mar15 :5.51 Mar 14 :4.83 Mar 13:3.37 Mar 12: 2.00

• Demonetization Impact
• Management commented that the on-the-ground situation with regards collections is improving in Bihar
and Jharkhand. UP and Maharashtra still lag other states in terms of collection efficiency, but management
expects the situation to normalize post the elections.
• Excluding UP and Maharashtra, collection efficiency for dues payable in November as of date (i.e. 25th
January, 2017) stands at 99%
• For off-balance sheet assets, the company has to recognize interest income only when received and
cannot accrue interest income at all.