NBFC Thread

What are the fastest growing NBFCs by sales growth? by profit growth?
What are the niche areas for NBFCs?

 

I have Bajaj Finance and CAPF doing well in portfolio

NBFC stocks make merry on D-Street, six stocks to look at from this space

The non-banking financial companies (NBFCs) have had a great ride on Dalal Street so far this year.

Stocks of some of these companies have surged as much as 23 per cent during the calendar year on hopes of revival in domestic consumption.

Prediction of an above-normal monsoon has also spurred these stocks with investors running to initiate long positions to make the most out of the euphoria.

The biggest NBFC of them all, HDFC, has led from the front, surging 8 per cent in the past five sessions after posting a set of March quarter numbers that met expectations of most analysts.

Among others, Mahindra & Mahindra Finance, Shriram Transport Finance and SKS Microfinance have gained as much as 23 per cent on a year-to-date basis. "We have been positive on NBFCs for quite a while now. We are specifically focused on the retail-oriented NBFCs. We also picked up rural-focused NBFCs a few months back before the market priced in a normal monsoon and the stocks ran up quite substantially," said Pankaj Tibrewal, Fund Manager-Equity, Kotak Mutual Fund.

Neeraj Deewan of Quantum Securities is convinced that stocks can give good returns going ahead.

"There is definitely some improvement across industry. These are the stocks that can give you good returns where the return on assets (ROAs) is pretty decent," he said.

The rally, however, has not been broadbased. Housing finance companies have suffered in the overall rally with stocks like LIC Housing Finance giving negative returns of 11.64.

But, Santosh Singh, BFSI and Head of Research, Haitong Securities, sees the segment growing rapidly in the coming years.

"Since the housing finance segment is growing at 15-20 per cent for many years, it will keep growing at that rate. We prefer individual housing finance companies, such as HDFC," he said.

We have compiled a list of stock ideas from top experts from the NBFC space.

Hemang Jani, Senior VP, Sharekhan
Top picks: Bajaj Finance, Capital First

Hemang Jani prefers Bajaj Finance and Capital First on the hopes of a pickup in demand for two-wheelers.

"I think from our coverage Bajaj Finance and Capital First these are the two companies which are focussing on the retail financing and the two-wheeler also would be an important component of their portfolio," he said.

"Bajaj Finance, in particular, is growing at 30 per cent. So, I think if there is going to be a lot of traction in the two-wheeler sales and probably they might surprise on the upside going forward in terms of loan growth," he added.

Mehraboon Irani, Nirmal Bang Securities
Top picks: Bajaj Finance, Cholamandalam, M&M Finance, L&T Finance

Bajaj Finance is also the top pick for Mehraboon Irani with Cholamandalam Finance, M&M Finance following. He is also bullish on L&T Finance Holding after Q4 numbers.

"Bajaj Finance is definitely the best NBFC around, my second best bet would be a tossup between Shriram Transport and M&M Finance but the dark horse in this pack is L&T Finance, the company has a strategy in place to change the business model and if that works out then there could be a catching up with other peers," he said.

https://economictimes.indiatimes.com/markets/stocks/trends/nbfc-stocks-make-merry-on-d-street-six-stocks-to-look-at-from-this-space/articleshow/52122899.cms