NBFCs are a high-risk bet now; bottom-fishing here is fraught with risks

Asset-liability management, ability to quickly pass of high cost of funds and recovery capacity in worst case scenario are key issues

Do non-banking financial companies (NBFCs) and housing finance companies (NFCs) offer good entry points at recent dips post Friday’s free-fall? Well, investors should consider some key points before bottom fishing in these stocks.

Friday’s fall was not on account of systematic crisis or any fundamental concerns on part of these packs, say experts. Liquidity and profitability concerns weighed on these two packs. Thus, asset-liability management (ALM) is critical to understand. For HFCs, ALM becomes more serious as they lend for longer term say 10 or 15 years. “There is asset-liability mismatch risk in NBFCs and mainly housing finance space. Players,