Nice post Dhruva. I have a question regarding the market (credit card industry) I believe considering the lending history for farmers and the recent ECLG for Msme, which shows that we have a poor credit culture, the industry might grow but with a subsequent lower quality standard in tier 2 and tier 3 cities and a reduction in the MDR can reduce benefits which inturn can reduce credit card viability as an instrument. Also even after so much push for UPI cash levels are near ATH so a subsequent challenge is the mentality shift which would also be hard to overcome.
Hi Dhruva, A small input (might be something I am missing): Shouldn't we take a margin of safety. You calculated Rs 830 as a price after taking some assumptions. Wouldn't a good buying price be 590 after taking 30 percent MOS??
I have taken 15% cagr growth for 20 year, whereas the industry & SBI cards itself growing north of 20% historically. also, terminal growth of 6% could be higher as well.
That's where our margin of safety is.
End of the day we have to assess has this business potential to grow by 15% cagr.
I think it has and i would love to buy it at 30% discount as well when it happens.
Nice Article Dhruva. Thank You
Nice post Dhruva. I have a question regarding the market (credit card industry) I believe considering the lending history for farmers and the recent ECLG for Msme, which shows that we have a poor credit culture, the industry might grow but with a subsequent lower quality standard in tier 2 and tier 3 cities and a reduction in the MDR can reduce benefits which inturn can reduce credit card viability as an instrument. Also even after so much push for UPI cash levels are near ATH so a subsequent challenge is the mentality shift which would also be hard to overcome.
Side note - Please ,Next post on reverse DCF xD.
Hi Dhruva, A small input (might be something I am missing): Shouldn't we take a margin of safety. You calculated Rs 830 as a price after taking some assumptions. Wouldn't a good buying price be 590 after taking 30 percent MOS??
I have taken 15% cagr growth for 20 year, whereas the industry & SBI cards itself growing north of 20% historically. also, terminal growth of 6% could be higher as well.
That's where our margin of safety is.
End of the day we have to assess has this business potential to grow by 15% cagr.
I think it has and i would love to buy it at 30% discount as well when it happens.
https://twitter.com/Dhruvapandey/status/1595279598904037377?s=20&t=aV1Wtgq9SFn0voxSIEWyZA
This is fair. Thanks for the clarification