DHFL crisis: NBFC stocks stare at a difficult path to retain investor faith

With many uncertainties gripping the sector, brokerages such as Normura, CLSA, Credit Suisse, and Morgan Stanley prefer banks over NBFCs

The fear over contagion that investors were worried about since September last year after the IL&FS saga is unfolding possibly faster than anticipated. Dewan Housing Finance (DHFL) became the first victim of the liquidity crunch when it didn’t meet interest payment milestone and its credit rating was downgraded to default status. Given the Rs 1-trillion exposure of banks and mutual funds industry to DHFL, many believe another crisis is waiting to hit the sector. But for investors, the larger question is what’s ahead over the next couple of years.

The question is particularly relevant for those who joined the NBFC stocks