SKS Microfinance

I had recommended SKS Microfinance as a portfolio script. But after that unforseeable things happened; an internal fight, termination of CEO, who was praised just 2-3 months back.

 

I am not worried much about internal management fights as such. This dust settles down with some time, especially if the replacing leadership team is strong enough. That also may be true, but the way Akula could just have his way with the board and get Gurumani out so easily and the story of the SKS beginning and how he dealt with his personal family crisis, the stories of exploitation of the employees (toiling from 6:30 am to 11 pm everyday and 7 days a week with 40% attrition rate), the high interest rates for the poor (30-35%), the farmer suicides in AP....hmmm...I am not too sure about the ethics of this company any more.

 

Profit and margin wise, it will still probably do quite well, unless stifled by the Government. But unethical leadership usually slow poisons an entire company and unethical companies do not survive.

 

Hence after due consideration of new found information, I am removing SKS Microfinance from my recommended list of portfolio stocks.

 

For those who hold SKS at higher prices can average SKS near 1088, which is a strong support area for the script and then can hold for some time for it to bounce back and then book some profits and slowly move out.

 

It is recommended to avoid SKS for now for fresh buys. There are many other recommendations of mine doing quite well even after consolidation; buy them on dips and cuts and do not think of SKS for now.

 

I strongly believe that select midcaps still have lot of steam left. Some of my recent hits like AARTI INDUSTRIES, SANGAM INDUSTRIES, SPANCO, JBF INDUSTRIES, APM INDUSTRIES, GOKUL REFOILS, STERLITE TECHNOLOGIES, AQUA LOGISTICS, DCB, PANAMA PETROCHEM etc are truly good companies, whom markets are yet to fully honour...pick them up in small quantities on bad days for the market...remember that bad days for the market are actually good days for us, if you can choose the right script and invest into it.