 "NBFCs extend fall; Bajaj Finance, Indiabulls Housing down over 5%")
Shares of non-banking financial companies (NBFCs), including housing finance companies (HFCs), continue to remain under pressure for the fifth straight trading day on the bourses amid the ongoing crisis at the Infrastructure Leasing and Financial Services Ltd (IL&FS).
Bajaj Finance, Indiabulls Housing Finance, Reliance Home Finance, Central Bank of India, Cholamandalam Investment and Finance Company and Ujjivan Financial Services were down in the range of 5% to 15% on the National Stock Exchange (NSE) in intra-day trade.
At 10:47 am; Nifty Financial Services index was down 2% as compared to 0.6% fall in the Nifty 50 index. The S&P BSE Finance index was too down 2% as compared to 0.6% fall in the S&P BSE Sensex. Since September 14, 2018, in past five trading days, the financial services index slipped 7% against a 3.7% decline in the benchmark index.
“IL&FS, one of India’s largest infrastructure financiers with consolidated debt of Rs910bn, has defaulted on its debt obligations. Rating agency ICRA downgraded it from AA+ to BB on 8th September and then to D on 17th September. What sparked Friday’s NBFC (non-banking financial companies) sell-off, was the fear of a liquidity crunch as fallout from this default,” Macquarie Research said in a note.
As per media reports, the Reserve Bank of India (RBI) has stepped up supervision of NBFCs and HFCs. According to them, the central bank has asked banks to review their exposures to these companies, suggesting that there may be some risk build-up in some of them.
If bank debt also becomes costly/ unavailable, then it may ruin the investment case for most NBFCs dependant on wholesale borrowings. Unlike HDFC and to some degree Bajaj Finance, most NBFCs in India, though eligible to, are not able to raise deposits from the public in times of a crunch, said foreign brokerage firm.
“After a series of defaults from IL&FS, investors are now turning risk averse, which was further aggravated by a rating downgrade by ICRA. This coupled with raising concerns over tightening liquidity in the system, created a panic situation in the market and investors chose to exit from companies (especially NBFCs and HFCs), that had any exposure to Commercial Papers (CPs),” analysts at Cholamandalam Securities said in a report.
“The recent correction on the back of debt market liquidity concerns prompts us to review a few strong NBFCs. Several factors including business tailwinds, robust operating models catering to the retail segment and parental support provide comfort to banks/debt markets and ensure that liquidity remains strong; stress, if any, remains only to near-term NIM,” Kotak Securities said in NBFCs sector update.
Bajaj Finance, Indiabulls Housing Finance, Reliance Home Finance, Central Bank of India, Cholamandalam Investment and Finance Company and Ujjivan Financial Services were down in the range of 5% to 15% on the National Stock Exchange (NSE) in intra-day trade.
At 10:47 am; Nifty Financial Services index was down 2% as compared to 0.6% fall in the Nifty 50 index. The S&P BSE Finance index was too down 2% as compared to 0.6% fall in the S&P BSE Sensex. Since September 14, 2018, in past five trading days, the financial services index slipped 7% against a 3.7% decline in the benchmark index.
“IL&FS, one of India’s largest infrastructure financiers with consolidated debt of Rs910bn, has defaulted on its debt obligations. Rating agency ICRA downgraded it from AA+ to BB on 8th September and then to D on 17th September. What sparked Friday’s NBFC (non-banking financial companies) sell-off, was the fear of a liquidity crunch as fallout from this default,” Macquarie Research said in a note.
As per media reports, the Reserve Bank of India (RBI) has stepped up supervision of NBFCs and HFCs. According to them, the central bank has asked banks to review their exposures to these companies, suggesting that there may be some risk build-up in some of them.
If bank debt also becomes costly/ unavailable, then it may ruin the investment case for most NBFCs dependant on wholesale borrowings. Unlike HDFC and to some degree Bajaj Finance, most NBFCs in India, though eligible to, are not able to raise deposits from the public in times of a crunch, said foreign brokerage firm.
“After a series of defaults from IL&FS, investors are now turning risk averse, which was further aggravated by a rating downgrade by ICRA. This coupled with raising concerns over tightening liquidity in the system, created a panic situation in the market and investors chose to exit from companies (especially NBFCs and HFCs), that had any exposure to Commercial Papers (CPs),” analysts at Cholamandalam Securities said in a report.
“The recent correction on the back of debt market liquidity concerns prompts us to review a few strong NBFCs. Several factors including business tailwinds, robust operating models catering to the retail segment and parental support provide comfort to banks/debt markets and ensure that liquidity remains strong; stress, if any, remains only to near-term NIM,” Kotak Securities said in NBFCs sector update.
| Price on BSE | % chg | ||||
| Company | 14/09/2018 | 21/09/2018 | LTP | 1 day | 5 days |
| Dewan Hsg. Fin. | 615.10 | 351.55 | 402.65 | 14.5 | -34.5 |
| Central Bank | 66.90 | 53.35 | 44.70 | -16.2 | -33.2 |
| Yes Bank | 323.10 | 227.05 | 230.50 | 1.5 | -28.7 |
| Reliance Capital | 418.55 | 337.55 | 323.85 | -4.1 | -22.6 |
| IL&FS Inv.Manag. | 9.87 | 7.36 | 7.66 | 4.1 | -22.4 |
| Reliance Nip.Lif | 223.60 | 183.15 | 176.35 | -3.7 | -21.1 |
| Vijaya Bank | 59.25 | 48.40 | 47.45 | -2.0 | -19.9 |
| Repco Home Fin | 535.10 | 461.45 | 432.35 | -6.3 | -19.2 |
| Indiabulls Hous. | 1226.80 | 1061.90 | 997.10 | -6.1 | -18.7 |
| Bank of Baroda | 134.55 | 111.65 | 110.85 | -0.7 | -17.6 |
| L&T Fin.Holdings | 161.05 | 140.10 | 132.80 | -5.2 | -17.5 |
| Indian Bank | 322.55 | 272.75 | 268.05 | -1.7 | -16.9 |
| SREI Infra. Fin. | 49.10 | 42.20 | 41.00 | -2.8 | -16.5 |
| Edelweiss.Fin. | 270.10 | 236.65 | 226.40 | -4.3 | -16.2 |
| Ujjivan Fin.Ser. | 332.00 | 296.45 | 279.80 | -5.6 | -15.7 |
| Bajaj Fin. | 2668.85 | 2384.60 | 2269.15 | -4.8 | -15.0 |
| Punjab Natl.Bank | 82.85 | 72.80 | 71.25 | -2.1 | -14.0 |
| Netwrk.18 Media | 55.45 | 48.55 | 47.70 | -1.8 | -14.0 |
| Alankit | 21.35 | 19.15 | 18.40 | -3.9 | -13.8 |
| J & K Bank | 55.00 | 47.95 | 47.65 | -0.6 | -13.4 |
| M & M Fin. Serv. | 453.50 | 411.35 | 393.00 | -4.5 | -13.3 |
| I D F C | 50.80 | 44.65 | 44.10 | -1.2 | -13.2 |
| Capital First | 604.65 | 548.30 | 527.50 | -3.8 | -12.8 |
| Union Bank (I) | 83.65 | 73.85 | 73.10 | -1.0 | -12.6 |
| IDFC Bank | 44.80 | 40.50 | 39.30 | -3.0 | -12.3 |
| PTC India Fin | 17.35 | 15.85 | 15.25 | -3.8 | -12.1 |
| LIC Housing Fin. | 479.35 | 438.20 | 421.80 | -3.7 | -12.0 |
| Manappuram Fin. | 88.30 | 81.30 | 77.70 | -4.4 | -12.0 |
| Geojit Fin. Ser. | 61.90 | 56.30 | 54.60 | -3.0 | -11.8 |
| Capri Global | 118.85 | 110.60 | 105.10 | -5.0 | -11.6 |
| Canara Bank | 269.45 | 239.60 | 238.30 | -0.5 | -11.6 |
| Indiabulls Vent. | 744.50 | 693.35 | 658.70 | -5.0 | -11.5 |
| Equitas Holdings | 148.05 | 132.90 | 131.50 | -1.1 | -11.2 |
| SBI Life Insuran | 669.15 | 610.00 | 594.45 | -2.5 | -11.2 |
| Syndicate Bank | 38.15 | 34.40 | 33.90 | -1.5 | -11.1 |
| IIFL Holdings | 655.40 | 605.75 | 583.00 | -3.8 | -11.0 |
| Magma Fincorp | 136.15 | 126.10 | 121.30 | -3.8 | -10.9 |
| Oriental Bank | 76.30 | 68.80 | 68.05 | -1.1 | -10.8 |
| JM Financial | 112.15 | 102.25 | 100.20 | -2.0 | -10.7 |
| ICICI Pru Life | 378.55 | 338.80 | 338.60 | -0.1 | -10.6 |
| Dhanlaxmi Bank | 14.30 | 13.40 | 12.80 | -4.5 | -10.5 |
| PNB Housing | 1291.75 | 1173.15 | 1156.75 | -1.4 | -10.5 |
| Can Fin Homes | 309.40 | 290.25 | 277.60 | -4.4 | -10.3 |
| RBL Bank | 611.05 | 564.30 | 548.25 | -2.8 | -10.3 |
| HDFC Stand. Life | 425.30 | 387.50 | 382.10 | -1.4 | -10.2 |
| Andhra Bank | 31.70 | 29.40 | 28.50 | -3.1 | -10.1 |
| South Ind.Bank | 16.40 | 15.10 | 14.80 | -2.0 | -9.8 |
| AU Small Finance | 695.60 | 642.35 | 629.95 | -1.9 | -9.4 |
| Centrum Capital | 47.45 | 44.00 | 43.00 | -2.3 | -9.4 |
| GIC Housing Fin | 307.85 | 289.90 | 279.00 | -3.8 | -9.4 |
| IndusInd Bank | 1873.60 | 1761.70 | 1699.00 | -3.6 | -9.3 |
| Cholaman.Inv.&Fn | 1323.25 | 1270.65 | 1200.00 | -5.6 | -9.3 |
| Allahabad Bank | 40.60 | 37.90 | 36.85 | -2.8 | -9.2 |
| Karnataka Bank | 116.55 | 107.45 | 106.15 | -1.2 | -8.9 |
| IFCI | 15.90 | 15.05 | 14.50 | -3.7 | -8.8 |
| Bank of India | 93.15 | 86.55 | 85.05 | -1.7 | -8.7 |
| Bharat Financial | 1149.45 | 1090.65 | 1050.65 | -3.7 | -8.6 |
| Mah. Scooters | 2909.55 | 2628.85 | 2660.15 | 1.2 | -8.6 |
| H D F C | 1926.25 | 1835.25 | 1765.55 | -3.8 | -8.3 |
| Bajaj Finserv | 6699.40 | 6253.50 | 6146.45 | -1.7 | -8.3 |
| LTP: Last traded price on BSE at 10:47 am. | |||||
| List of stocks fall more than 8% since September 14, 2018 | |||||
| Stocks from the S&P BSE Finance index | |||||
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