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NBFC stocks fall; Edelweiss,GIC Housing, Reliance Capital hit 52-week lows

Edelweiss Financial Services, Srei Infrastructure Finance, Can Fin Homes and Reliance Capital were down 5% to 14% on the BSE.

SI Reporter  |  Mumbai 

hare brokers react to falling stock prices on screens of computers and television
hare brokers react to falling stock prices on screens of computers and television

Shares of non-banking financial companies (NBFC) including housing finance companies (HFCs) continued to be under pressure with most of these stocks trading at their 52-week lows on concerns of rising funding costs, which will affect net interest margins (NIMs) and growth.

Edelweiss Financial Services, Srei Infrastructure Finance, and were down 5% to 14% on the BSE. In comparison, the S&P BSE Sensex was trading 0.33% lower at 36,420 points at 12:36 pm.

Besides these four stocks, GIC Housing Finance, Housing and Urban Development Corporation (HUDCO), PNB Housing Finance, Motilal Oswal Financial Services and Repco Home Finance have hit their respective 52-week lows on the BSE in intra-day trade on Thursday.

“Against the backdrop of rising rates globally, local rates have been rising. AAA-rated paper for one year is currently yielding around 8.6% vs. around 6.8% a year back. The trend is likely continued to upward. Moreover, in the last few years, there was a surge in bank and bond market lending to NBFCs,” according to analysts at Morgan Stanley.

After the IL&FS default, we expect to be more conservative in lending to NBFCs, which is likely to push up pricing. For NBFCs as a whole, we think the issue is funding cost (and hence NIM) rather than liquidity. Also, most of these NBFCs have been priced for continued strong growth – implying increasing funding requirements. This may slow down as funding costs increase, it added.

Analysts at Jefferies believe funding cost at NBFC/ HFCs should rise due to repricing of non convertible debentures (NCDs) post maturity and increase in incremental funding costs. NBFCs with a presence in niche segments (used CV, rural segment) should be better positioned to pass thru higher cost to consumers.

IL&FS default and the turmoil in the have increased aversion towards lending to NBFCs in the short term, the brokerage firm said in a note.

COMPANY LATEST ONE-WEEK BEFORE LOSS(%)
DEWAN HSG. FIN. 302.50 610.60 -50.5
SREI INFRA. FIN. 35.10 46.90 -25.2
CAN FIN HOMES 232.90 307.80 -24.3
INDIABULLS VENT. 564.85 729.80 -22.6
PNB HOUSING 960.00 1233.90 -22.2
EDELWEISS.FIN. 193.40 244.35 -20.9
IFCI 12.60 15.50 -18.7
INDIABULLS HOUS. 955.95 1156.50 -17.3
REPCO HOME FIN 424.25 510.05 -16.8
JM FINANCIAL 86.50 103.90 -16.8
RELIANCE CAPITAL 301.00 361.25 -16.7
RELIGARE ENTERP. 36.45 43.30 -15.8
CAPRI GLOBAL 101.30 120.05 -15.6
INDOSTAR CAPITAL 349.00 410.60 -15.0
SATIN CREDITCARE 289.95 340.65 -14.9
RELIANCE HOME 52.35 61.20 -14.5
UJJIVAN FIN.SER. 271.00 315.90 -14.2
CAPITAL FIRST 506.55 586.45 -13.6
SIL INVESTMENTS 184.75 213.10 -13.3
CENTRUM CAPITAL 39.50 45.25 -12.7
L&T FIN.HOLDINGS 127.60 146.10 -12.7
OSWAL GREEN TECH 17.55 20.00 -12.3
GIC HOUSING FIN 260.45 296.05 -12.0
RURAL ELEC.CORP. 100.10 113.40 -11.7
5PAISA CAPITAL 245.00 276.75 -11.5
IIFL HOLDINGS 539.00 603.40 -10.7
MUTHOOT CAP.SERV 877.80 980.95 -10.5
BF INVESTMENT 294.00 328.35 -10.5
GRUH FINANCE 297.00 330.60 -10.2
PTC INDIA FIN 15.10 16.80 -10.1
H U D C O 49.60 55.15 -10.1
MOTIL.OSWAL.FIN. 684.50 759.55 -9.9
BAJAJ FIN. 2255.90 2499.00 -9.7



First Published: Thu, September 27 2018. 12:40 IST
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