Views on Life & on Equity Investing

Wonder, Wealth & Abundance

DELTA BRAC HOUSING, Minimising Variables

with 23 comments

An investor must endure and persevere the compounding machinery to create long term wealth. Secondly, what has been gained thus far must not be lost. 

Although I have an opinion on every subject matter, however with a view to limit the twaddle on the concentrated / diversified debate, I can say with a quite high degree of certainty that:

Wealth can be preserved if you can predict future changes in an industry or stick to existing proven ideas.  [ How can I be more vague and yet correct ? ]

I also view diversification of portfolio as a cost to my quality of life. I want investing to take no more than 10-20% of my waking hours after other interests. ( 1-2 hours per day). 

Some of the market leader MNCs in Bangladesh and Nepal have grown 100% – 400% (GSK 300%, Bata 100%, Reckitt Banckiser 100%, Unilever Nepal 50% in past two months) in the past year, still available between 15 – 22 times earnings. In those companies one can even put 20% in a single idea ( with quality of life Index unmarred). Relatively to India they still look far cheaper and equally strong companies and in my opinion better rates of growth impending. You can’t ask for more in life than market leading MNC growing at 25% and available below 20 times earnings, 80% dividend payout ratio, and some more.

Value Investing

I do not intend to belittle or disparage any investor but you have to agree that market is full of surprises. 

Very recently (February, March) you heard a large number of people that it is very risky to own PSU Banking stocks and beaten down names in India. Yet this category has delivered maximum returns. 44% compounded by BANKEX alone in the past 90 days. 

I have tried to simulate a virtual portfolio of 30 – 35 stocks which did better than my actual 12-14 stock portfolio in India. Downside is quality of life. In the actual portfolio Wim Plast, Cera, Atul Auto, Bajaj Finance were the best performers in the past 24 months. Kitex a minor holding since past 2 months did well too. What I am trying to say is that its possible in my opinion to make more money in a more diversified portfolio than more concentrated. ( Diversification can be too much to tackle for me if it goes above 100-200 stocks)

Given that I find India slightly overvalued to peripheral geographies, I’d like to diversify a bit more in India. 

When is diversification too much

I feel that when it starts impacting your personal life and despite full time devoted to investing the results are same or below averages, diversification become detrimental.

A well known investor returned same as averages.

Delta Brac Housing (DBH)

You will also hear that it is impossible to identify a company as a 20-30-50 or 100 bagger before it has become one. Based on my past few months of research, understanding of Housing Industry, a thorough bred company like Delta Brac Housing. Promoted by best of breed organisations like World Bank, HDFC and BRAC NGO and BRAC Bank, this company has no reason, not to be 100 times bigger in the next 20-25 years. An apartment in Dhaka costs between 4-8 million BDT. Pioneer and market leader in private sector DBH has a loan book (that the company has refused to grow in the past two years), is only 2600 Crores BDT. 90% of apartments/housing loans originate in Dhaka, which accounts for 10% of Bangladesh’s population. Bangladesh’s housing finance market is 20 years behind India. 90% of borrowing of DBH are directly from fixed deposits from small customers through strong distribution network and Ads in media (nobody can cut off DBHs lending lines).

Corporate Tax Rate in Bangladesh varies from 27% – 42.5% (down fom 45% last year and expected to come down to 40% next year). It is highest for Banks, FIs, NBFCs i.e. 42.5%. Eventually it will come down to a more rational 30%, which can take  several years. GNPA of Bangladesh’s banking sector are around 10%, NNPA of 4-5% post financial crisis of 2011. Despite these setbacks, DBH is growing profits at 20-22%, GNPA of 0.2%, NNPA of 0%.

It has chosen to limit AUM growth in the short term. Only 6 companies (including parent BRAC BANK) have been rated AAA out of thousands in Bangladesh by CRAB ( The only company to be rated AAA in Bangladesh, eight years in a row.

With taxation relief and a more even development in the 8th most populous country of the world. (Roughly 15% of India’s population). This leading and pioneer housing finance company should be north of 10-20 Billion USD market cap based on the simple maths of having 10% mortgage market share (something it currently has). You’d ask then, why is it the leader. Because 80% and rapidly shrinking market is held by inefficient Govt. owned organisation. (  It had 0% market share in 1995, 5% in 2010, currently 10%. Average apartment price after 15-20 years is likely to be in several crores (70 Lacs today) but I have assumed only 1 crore BDT for my calculations. Bangladesh is three times more densely populated than India – meaning house prices are not heading south. Current market cap of DBH which is in the same league as HDFC was in 1980s in India is less than 100 million USD. And that is a market leader. 

Using a simplistic assumption of Bangladesh  reaching India’s economic development level ( which is what, 110 out of 180 countries), Bangladesh’s housing mortgage market should be 15% of 7 Trillion INR. i.e.  131,000 Crores BDT, Currently it is almost a 6th of that. Mortgage to GDP ratio in India has risen from 2% of GDP in the year 2000 to 7% as of 2014.

Bangladesh mortgage finance market is growing at 20% CAGR, and I believe it can grow at 30% CAGR as wholesale lending develops. As Bangladesh is 20 years behind India, its Mortgage to GDP ratio reflects that, with somewhere in vicinity of 1.5%. Some of the developed countries like the US, UK, Scandinavian countries, Singapore have this ratio as high as 70-90% of GDP. That makes me actually very optimistic about morgage finance industry even in India [ not that my fellow beings will be steeped in debt 🙂 ]

Despite these tax challenges and lopsided growth of Bangladesh (extreme destitution), per capita income less than half of even that of India, DBH sports 22% ROE, which is already commendable, but can go to 35% if tax stucture is same as for Indian corporates. DBH has not been a a cheap company at 30 times earning in 2011, momentarily selling at 12-13 time earnings as the banking industry is in throes of NPA pangs in Bangladesh

If not 200 times, 80-100 times growth is assured. Do some research and read past three years of annual reports. You have chanced on a stock which probably does not even require 10 minutes per month of monitoring. It is on the way to become my biggest holding in another couple of months.As successful long term investing requires reduction in number of factors effecting results and minimising the number of decisions. With DBH the only variable you have to worry about is an earthwide flood that may require building Noah’s Ark.

Disclosure: Invested / vested interest in all stocks above.

Written by amitdipsite

May 18, 2014 at 2:02 am

Posted in Uncategorized

23 Responses

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  1. Hi Amit, am intrested to invest in this company, i have a hdfc demat and trading ac in india, but am not sure can buy it from there, plesse suggest me how csn i invest as i dtay in india. Eagerly waiting for ur reply. Thankd shailesh


    May 18, 2014 at 10:29 am

  2. Dear Shailesh, there is not restriction to invest in Bangladesh for anyone regardless of country of citizenship or residence. Several friends from India are already invested in Bangladesh. Complete list of brokers is here:

    I have used this broker: and this custodian bank:

    Let me know how it works out for you

    All the best



    Amit Arora

    May 18, 2014 at 10:43 am

  3. How can I open account , I don't have any local address for opening the account and bank only give option for Sri Lanka and Bangladesh.

    Please help me out for this.

    Praveen Goswami

    May 18, 2014 at 4:49 pm

  4. Hi Amit, I stay in India,I heard from some analysts that TV today is going to become a big multibagger due to digitalization, in the coming next 2 to 3 years, please give your views, thanks a lot, shailesh


    May 18, 2014 at 9:18 pm

  5. There is no such restriction to invest in Bangladesh. Indian citizen living in India can invest. Any citizen of any nationality living in any country can invest. Eg: Kenyan National living in Brazil can also invest in Bangladesh


    Amit Arora

    May 19, 2014 at 5:12 am

  6. Hey Amit,
    Have you opened demat account at LankaBangla Finance and normal bank account at commercial bank?
    The gives option to select the country you are from as Srilanka or Bangladesh. How did you open an account in this bank?



    May 20, 2014 at 5:23 am

  7. Dear Ramki

    Email and if does not work for
    you let me know


    Amit Arora

    May 20, 2014 at 6:19 am

  8. WIM PLAST delivers 15 bags since the time of this post, still holding

    Amit Arora

    May 21, 2014 at 8:57 am

  9. Hrithik, I am invested in TVToday, believe it has ways to go, a 3-5 years story. Media businesses are cash cows, once money begins, it will keep flowing. It is not expensive even now.

    Amit, Have been reading your blog for a few months, but liked Delta Brac the most. Yet to dig deeper on my own though… Thanks for great job.


    May 28, 2014 at 3:35 pm

  10. Thanks. I found Unilever Nepal most compelling followed by DBH and GSK Bangladesh

    All the best

    Amit Arora

    May 29, 2014 at 4:35 am

  11. This comment has been removed by the author.


    June 5, 2014 at 2:54 pm

  12. Dear Lokesh

    Please go through the list of brokers, there are several Banks as well which provide trading/demat services

    Hope you make lots of money by investing in Bangladesh.

    All the best,



    Amit Arora

    June 7, 2014 at 12:42 am

  13. Unpleasant fact of a materially oriented society, top talent needs to sell soap and toiletries:

    Amit Arora

    June 8, 2014 at 10:36 am

  14. sir u have exited ur long term picks in photoquip and omnitex industries in bulk deals yesterday i have saw ur family memmebrs name

    Gudibanda Krishna

    June 11, 2014 at 10:41 am

  15. I think you may have the right information. Very satisfied with 20% returns and not aiming for long shots. (Avoid using Sir)

    May come back to them later. Couple of larger companies like Superhouse, Gulshan Polyols, Kovai Medica, Muthoot Capital between 100-300 crores range look better in short term (3 years) than those two. Other than that, my long term (10-20 years) bets are large stable companies like MOBIL, Unilver, GSK, HDFC, JK Bank etc. in India or overseas.


    Amit Arora

    June 12, 2014 at 4:30 am

  16. Unilever Nepal PE comes around 45-60. is it still attractive enough????

    Karthikraja K

    June 13, 2014 at 12:18 pm

  17. Annual PE as at 14 June 2014 is 14-15 instead of 45-60

    That PE is for 1 quarter

    Amit Arora

    June 13, 2014 at 10:33 pm

  18. Amit,

    Very much convinced on DBH's future. Looks very promising. Only question is with how much portfolio can be allocated to this . Is 20% too high to bet upon ? Another query is how safe our investment be in a country like bangladesh ? sorry for being too naive.


    June 14, 2014 at 4:48 pm

  19. You can invest in Berger Bangladesh, GSK Bangladesh, Reckitt Benckiser Bangladesh, Bata Bangladesh, Marico Bangladesh, DBH, MOBIL (MJLBD). You can put 20% collectively in above and this may outdo your other 80% portfolio in 20-25 years assuming you buy and hold.

    Amit Arora

    June 16, 2014 at 10:13 am

  20. Hi Amit,
    If you are given chance, what are your recommendation in Sri Lanka market. I selected Nestle Lanka ( PE 29), Chevron, Piramal Glass, Tokyo Cement and United Motors. Pl share your insight.
    PS: Finally opened Bank account in SL. Trading account in a week time.

    Karthikraja K

    June 28, 2014 at 3:57 pm

  21. never knew that we could invest in Bangladesh, Sri Lanka till i cam across this website today. feel like i missed the opportunity till date. can we invest in Nepal markets also.


    September 14, 2014 at 4:59 am

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