SKS Micro can give 25-30% returns in 2-3 years: Sachin Shah

Sachin Shah, Fund Manager at Emkay Investment Managers told CNBC-TV18, "We have recently invested in SKS Microfinance and have just initiated a small position in that company after the results. We have been tracking this company for a while now, in fact for quite a few years now and I think the kind of numbers that they have been delivering have been very solid. Of course, the one important thing is that the sector as a whole is actually doing very well growing in the range of about 40-50 percent as far as the loan book growth is concerned and that is what is possible for the next two or three years at least.""Obviously Reserve Bank of India (RBI) giving banking licence to so many microfinance companies is also a stamp from the RBI that the sector is now getting into the main stream. The overall size of the book of the entire microfinance is just in the range of maybe Rs 60,000-70,000 crore. So, it is still fairly small and it has the room to grow fairly good," he said. "SKS Microfinance is probably one of the few plays in the secondary market to participate in this sector. They have also been delivering fairly strong numbers. I think they will do probably about Rs 300 crore odd and that is their guidance also. They have already done half of that in the first half. So, it is available at probably under 20 times and growing at about 30-40 percent with return on equity (RoE) of about 30 percent. So, the numbers are looking fairly solid. So, the stock can probably deliver the returns in the range of 25-30 percent for next two to three years," he added.