FINANCE AND LEASING SECTOR

• BLI has shown a double or triple growth in their loan book as well as interest income while SFL is just normal growth.
  
  
• Also both BLI & SFL have same amount of loan book but BLI earns twice as much as interest income compared to SFL, how come is a question to me.
  
  
• On the other hand both companies have similar amount of interest expenses but BLI finances its loan book mainly from borrowings which are supposed to be higher than customer deposits while SFL mainly finances through customer deposits. In fact SFL's deposit base is more than 100% higher than BLI. Therefore ideally SFLs interest cost should be much less than BLI but it is not the case, why is another question to me.
  
  
• BLI generates much superior ROE compared to SFL and BLI's share price also trading on the floor very aggressively compared to SFL. In fact BLI have very high negative valuation gap whereas SFL has a positive valuation gap. So comparatively BLI is expensive than SFL at the moment.
  
  
• So now my feeling is there is some thing wrong either in BLI or SFL. Now I will open this discussion for the forum members to express more views. In fact that will help to understand true state of affairs of this two.
  

Harry82 wrote:EquityChamp,


Why you compare OVER VALUED shares.(BLI and SFL)


Compare under valued share like LFIN CDB VFIN CFIN.....

Harry82 wrote:EquityChamp,
I think you have BLI and SFL shar.
You try to sell them tomorrow.

SLFINANCEWATCH wrote:It seems u suffer more than anyone else...

SLFINANCEWATCH wrote:This is not a fight man..Why cant you compare a finance share with all other finance companies..

EquityChamp wrote:Thought it is good to compare these two companies since these two are subjected to very hot discussion in this forum. A summary of the comparison given below.

• BLI has shown a double or triple growth in their loan book as well as interest income while SFL is just normal growth.
  
• Also both BLI & SFL have same amount of loan book but BLI earns twice as much as interest income compared to SFL, how come is a question to me.
  
• On the other hand both companies have similar amount of interest expenses but BLI finances its loan book mainly from borrowings which are supposed to be higher than customer deposits while SFL mainly finances through customer deposits. In fact SFL's deposit base is more than 100% higher than BLI. Therefore ideally SFLs interest cost should be much less than BLI but it is not the case, why is another question to me.
  
• BLI generates much superior ROE compared to SFL and BLI's share price also trading on the floor very aggressively compared to SFL. In fact BLI have very high negative valuation gap whereas SFL has a positive valuation gap. So comparatively BLI is expensive than SFL at the moment.
  
• So now my feeling is there is some thing wrong either in BLI or SFL. Now I will open this discussion for the forum members to express more views. In fact that will help to understand true state of affairs of this two.
  

       

	2014/15				9M 2015/16
	BLI		SFL		BLI		SFL
	Rs mn	Growth	Rs mn	Growth	Rs mn	Growth	Rs mn	Growth
Interest income	672	143%	1,051	6%	1,546	207%	817	4%
Interest expense	174	110%	620	-7%	421	223%	444	-5%
PAT	144	125%	27.5	-67%	514	376%	84	307%
Deposits	1,066	95%	5,379	19%	2,025	90%	5,667	5%

SLFINANCEWATCH wrote:Good Night Friends..Happy Trading on Tomorrow..

charith666lk wrote:Unbelievably unethical uneducated jokers all over the place. .

EquityChamp wrote:Is there anyone who really bothered of this. To make the discussion more interesting I have done another analysis comparing not only BLI & SFL but 8 more non commercial banking entities. I have found a really interesting piece of information to share with you. Please refer below table for details.
 

Rs mn	CFIN	LFIN	VFIN	HDFC	SFIN	AFSL	BLI	SFL	LOFC	CDB
Loans & advances and rental receivable 31st March 2015	55,499	55,959	12,569	23,454	7,841	3,540	3,115	5,041	49,797	29,620
Loans & advances and rental receivable 31st December 2015	61,813	68,067	16,967	26,688	9,509	4,489	5,423	5,349	66,553	38,222
Average loans & advances and rental receivable	58,656	62,013	14,768	25,071	8,675	4,015	4,269	5,195	58,175	33,921
Annualised interest income	12,496	14,020	3,140	6,212	1,941	1,172	2,061	1,089	12,465	6,568
Average Interest Yield (IY)	21.30%	22.6%	21.26%	24.8%	22.4%	29.2%	48.3%	21.0%	21.4%	19.4%
IY Rank	6	4	7	3	5	2	1	9	8	10

I have collected all the information from the released quarterly financial reports. Interest Yield is calculated by dividing annualised interest income by average loans and advances. Further to simplify the calculation I have assumed the total interest income of these companies generated from loans and advances and lease rentals given to customers.

Now you can look at the IY rank at the last raw. BLI is at the number one followed by AFSL and then HDFC. If you look at the absolute IY% in the proceeding immediate raw you can see BLI is way above the other guys. The gap between no 1 and no 2 is 19.1pp and the gap between no 2 and no 10 is only 9.8pp.

Further you can refer the average for this entire set of companies in below table.

Average for the total 10 companies
Average total loans & advances (Rs mn)	27,476
Average annualized interest income (Rs mn)	6,117
Average IY %	22.3%

The average yield is standing @ 22.3% while BLI alone is 48.3%, more than double the average rate. Can you believe this??. According to the published data this is the situation.

Now the main question is how only BLI can generate double the revenue from same class of assets compared to all the peers and even more than double to their sister company, SFL.

In my original post I concluded with a statement that there is something wrong either in SFL or BLI. And this analysis confirms to me SFL is doing normal course of business because their margins are within the average range but BLI is way over. Now I am asking the question whether BLI doing some thing wrong or manipulation here? Are they are following the path of TWOD?

I would like to know the opinion of the BLI lovers on this finding. Especially I want to know the view of Teller who are very favourable on BLI. If this performance of BLI is real and genuine they are far better than other finance companies and every investor should have that share in his/her portfolio. Is it should be the case really??

Experts of BLI, please substantiate.

Thanks