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Monday, January 17, 2022

NBFC: Improvement in loan repayment; These stocks may come faster

NBFC’s Sector Stocks: 

Among the sectors that have suffered the most from the lockdown are the non-banking financial companies i.e. NBFCs. However, after the lockdown opened, now some segments have started showing improvement in this sector. Although the overall picture is not completely clear yet. At present, there is no major trigger for NBFCs either. In such a situation, investors in this sector should still be cautious. However, the fundamentals of the shares look strong with recovery in demand. Brokerage house MK Global has given a report on stock strategy in the NBFC sector.

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Collection efficiency exceeds 65%

According to the report, the overall collection efficiency is improving now. As of August 20, the situation of the collection has improved for most lenders after the lockdown opens. Hopefully, it has improved more from 20 August to 20 September. By 20 August, the average collection efficiency of most lenders has crossed 65 per cent. Although the overall bounce rate is still 20 to 25 percent. According to the report, the constables have left the Moratorium from the book because they know that it is the only option to avoid EMI. The situation has become better due to this.

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Recovery in these segments too

Even after the lockdown opens, many people still want to keep the cash with them. In such a situation the demand for credit cards is increasing. At the same time, in addition to consumer durables, the demand for personal loans, especially two-wheeler, is also increasing. In such a situation, finance companies are getting their benefit.

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Comfortable on the liquidity front

Most small or big NBFC companies are looking comfortable on the liquidity front. Most private banks and some PSU banks have extended the term of RBI Moratorium for them. In addition, the recent raising of capital by most NBFCs (QIPs and Rights Issues) has improved the overall capital frequency and is seen to be adequate for any provisioning needs.

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How to make a strategy in share?

HDFC

Advice: BUY
Current Price: Rs 1700
Target: Rs 2000

Shriram Transport

Advice: BUY
Current Price: Rs 638
Target: Rs 792

Bajaj Finance

Advice: HOLD
Current Price: Rs 3322
Target: Rs 2950

LIC Housing Finance

Advice: HOLD
Current Price: Rs 288
Target: Rs 274

Magma fincorp

Advice: HOLD
Current Price: Rs 35
Target: Rs 31

Mahindra Finance

Advice: HOLD
Current Price: Rs 126
Target: Rs 128

Shriram City Union Finance

Advice: HOLD
Current Price: Rs 895
Target: Rs 724

L&T Finance Holdings

Advice: SELL
Current Price: 60 rupees
Target: Rs 48

(Note: We have given this information based on the report of the brokerage house. Seeing the risk in the market, consult the experts at your level before investing.)

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Source: www.financialexpress.com

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Damini Sharma
Experienced Senior Content Writer with a demonstrated history of working in the information technology and services industry. Skilled in SEO Copywriting, Web Content Writing, Storytelling, Blogging, and Social Media. Strong media and communication professional with a mass communication focused in Journalism from Sjmc davv indore.
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