NBFC stocks climb higher

Shares of select non-banking financial companies (NBFCs) rose between two to four per cent on Wednesday, after the Reserve Bank of India (RBI) released a discussion paper on entry of new private sector banks.

Religare Enterprises (up 3.67 per cent to Rs 430.35), Mahindra & Mahindra Financial Services (up 3.27 per cent to Rs 620.90), Shriram Transport Finance (up 2.99 per cent to Rs 728.05), Reliance Capital (up 2.08 per cent to Rs 774.50) IFCI (up 1.82 per cent to Rs 58.90) and LIC Housing Finance (up one per cent to Rs 1,214.15) were among the top gainers in the “A” group stocks on the BSE. Religare Enterprises’ wholly-owned unit Religare Finvest is registered as an NBFC with the RBI, while the rest are directly registered as NBFCs

“Out of these companies, IFCI and LIC Housing Finance have a better chance of qualifying for a banking license,” said Anil Bhattar, president of equity at Mumbai-based Kantilal Chhaganlal Securities.
 

BANKING ON THE PAPER SHARE PRICE ON BSE IN RS
Name	25-Feb	11-Aug	% Chg
M&M Finance Serv	323.10	620.90	92.17
Shriram Transport Fin	430.95	725.55	68.36
LIC Housing Fin	722.80	1214.15	67.98
IFCI	47.55	58.90	23.87
Religare Enterprises	362.30	430.35	18.78
Reliance Capital	727.40	774.50	6.48

Shares of some of these companies have rallied since Finance Minister Pranab Mukherjee in his budget speech said RBI was considering giving some additional banking licenses to private sector players, including NBFCs. Among these, Mahindra and Mahindra Financial Services (up 92.17 per cent), Shriram Transport Finance (up 68.36 per cent), LIC Housing Finance (up 67.98 per cent) and IFCI (up 23.87 per cent) have gained the most since the budget.

RBI said NBFCs or its subsidiaries or associates should not be engaged directly or indirectly in real estate activities for being considered eligible. This will hit Indiabulls Financial Services from qualifying according to experts. The company’s stock fell 3.08 per cent to Rs 157.25 on BSE on Wednesday.