How has the Microfinance sector performed in the fourth quarter? Which company stands out among others?

Fri, Aug 23, 2019 2:42 PM on Exclusive, Latest,

In NEPSE, there are 48 listed microfinance companies which is highest amongst other sector. Still, there are few companies waiting to be listed like Ghodighoda and Adhikhola, which have recently issued their IPO while few are waiting for the mergers to be completed. Among 48 listed companies, Nadep Laghubitta Bittiya Sanstha Limited (NADEP) is yet to publish its 4th quarter report for 2075/76.

Thus, in this analysis we look into various indicators of 47 listed microfinance companies based on the unaudited 4th Quarter report of 2075/76.

Paid-up Capital:

The minimum required capital for wholesale level, national, regional and district level microfinance are Rs 600 million, Rs 100 million, Rs 60 million and Rs 10 million respectively. As per Q4 reports, Swabhimaan microfinance, Janautthan microfinance and Nepal Agro are yet to meet their capital requirement.

Amount in ‘000

Reserves and Surplus:

Microfinance companies with highest reserves and surplus are Sana Kisan, Chhimek and Nirdhan Utthan with Rs 1.68 arba, 1.64 arba and 1.62 arba respectively.

Amount in ‘000

Net Profit:

As of the fourth quarter report of FY 2075/76, the listed microfinance institutes with the highest net profit are:

  1. Chhimek Laghubitta Bittiya Sanstha Limited (CBBL) with a net profit of Rs 92.07 crores
  2. Nirdhan Utthan Bank Limited (NUBL) with a net profit of Rs 73.95 crores
  3. Sana Kisan Bikas Bank Limited (SKBBL) with a net profit of Rs 49.10 crores

Amount in ‘000

Networth per Share:

Forward Community Microfinance leads in terms of networth with Rs 313.56 per share followed by Sana Kisan and RMDC with networth of Rs 313.56 and 302.08 respectively.

Earnings per Share:

Earnings per Share is one of the key indicators investor need to be updated about as it gives an idea about what the investor might get in return as dividend. National, Forward and Chhimek microfinance makes to the top list with EPS of Rs 87.12, 82.19 and 78.03 respectively.

Price to Earnings Ratio (PE):

Price to earnings ratio is one of the important indicator used by value investors to find out possible investment opportunities. The benchmark for PE ratio varies across sectors. As of 4th quarter 2075/76, companies with lowest PE ratio are Swabhimaan, Chhimek and Deprosc microfinances with PE ratio of 11.27, 12.18 and 12.98 respectively.

In a nutshell

The industry average Earnings per Share stands at Rs 35.38 and average PE ratio is 22.44.  With some of the microfinances like Nagbeli, Ganapati and Nepal Agro already announced dividend for the year 2075/76, what are your expectations from other companies?