Tag: non-banking financial companies (NBFCs)

Market sell-off: Experts believe this could be an opportunity to start buying

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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SP Tulsian of sptulsian.com, market expert Anand Tandon and Dhiraj Sachdev, managing partner and CIO at Roha Asset Managers shared their views and outlook on market fall and the sector/stocks they would place their bet on and spaces they would avoid.

“Consumption and financials are looking good. In financials, I will go with the big three-four banks HDFC Bank, ICICI Bank, Axis Bank and State Bank of India (SBI). One can be little cautious on the non-banking financial companies (NBFCs) at this stage. On consumption side, Godrej Consumer Products, Colgate Palmolive (India) or Bata India have come to the good levels. Those who can venture out in a little aggression can look for Hindustan Unilever Ltd (HUL) and Nestle India as well,” said Tulsian.

“If you think that the market is at or near its low, I would argue that there is a reason to assume that as a normal correction this is about to over in which case it does make sense to start buying. However, I don’t believe that it is business as usual and therefore I would change the thesis away from what has worked so far. I would stay away from financials and consumers and buy everything else,” said Tandon.

With regards to crude, Tulsian said, “Everything is getting covered with coronavirus fear. US now seems to be in the forefront in spite of seeing the worst affected country being Italy, Iran and South Korea, we have been seeing the fears mounting up. If it hits the east coast of US then that will be seen creating further carnage.”

“Meanwhile, the fall of the Brent to as low as USD 35 per barrel seems to be a big positive. Many of the sectors, tyre, aviation, paints will see taking a big positive and apart from that even the FY20 fiscal deficit can come under control and partly for Q1 of FY21 for the government as well. We have seen the worst of the growth for our country and once the gross domestic product (GDP) data of Q4 for China will come in, probably our data will look respectable. I am not too much worried and the fall of the Brent seems to be a big kicker, which eventually has to get factored in by the market once these coronavirus fears gets settled or subsides.”

Speaking about incremental money, Dhiraj Sachdev, Managing Partner and CIO of Roha Asset Managers said, “I am not worried about incremental money. I think these panic levels are ideally opportunities in disguise and mature investors would pump into such panics because we have realized time and again in the last 20 years that such mayhems and pessimisms are points of maximum opportunity. So, while the market is worried about global sell-off, crude oil fears, supply chain disruptions, COVID, etc. we do believe that these are panicky kind of reactions which are temporary in nature and over a period of time as the dust settles, things will come to normalised levels.”

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Plan to complete Brookfield transaction soon; aim to scale up used vehicle lending biz, says Indostar Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sequentially, it was a very weak third quarter across parameters for Indostar Capital Finance. Disbursals remained on the lower side for second quarter in the row, while assets under management declined.

R Sridhar, executive VC and CEO of the company said post the IL&FS crisis, NBFCs have faced major liquidity stress. “The last fifteen months has been a challenging period but we have been able to manage through many of our strategies. Liquidity has improved substantially now, we have received a lot of money in January; on the Partial Credit Guarantee scheme we have received about Rs 500 crore, term loans have started coming,” he added.

On the vehicle financing business, he said “In commercial vehicle (CV) financing, we are neither at the bottom of the pyramid nor at the top end of the spectrum. We are focusing more on used vehicles. So, our portfolio consists of two-thirds of used and one-third of new vehicle finance, which gives us a blended yield of over 16.5 percent.” Going forward, the potential to scale up this business is quite large because except three large companies, there are no NBFCs in CV financing space, he said in an interview with CNBC-TV18.

Moreover, with the scrappage policy likely to come by March 31, 2020 – the next three-five years there could be lot of scope for lending to used vehicles. In the used vehicle space, we have positioned our company at a very strategic level. “I am also confident that with the capital coming in, we can look at scaling up this business very high,” said Sridhar.

Meanwhile, “Brookfield has signed binding agreement to infuse Rs 1,225 crore into Indostar. So, we are focusing on concluding that transaction at the earliest,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI’s measures will boost infrastructure sector, says Yashpal Gupta of Repco Home Finance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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RBI’s relief from non-performing assets (NPAs) classification for delayed real estate commercial projects for a year is a much-needed measure and it will boost the sector, said Yashpal Gupta, MD and CEO of Repco Home Finance.

Reserve Bank of India’s Monetary Policy Committee on Thursday decided not to downgrade any commercial real estate loan if a project gets delayed with a valid reason.

“As far as our exposure to commercial real estate is concerned, that is zero but many of our customers have booked flats in those projects and because of delays they are not able to repay in time. So, hopefully that will also affect the individual loans and that will reduce the NPA,” Gupta told CNBC-TV18.

“Hopefully it will result in boosting the infrastructure sector and banks will give additional loans that will boost demand,” he said.

On extension of micro, small and medium enterprises (MSME) restructuring scheme, Gupta said it will not have any direct impact on the company and that will be credit-positive overall.

The measure will improve liquidity situation for the non-banking financial companies (NBFCs), housing finance companies (HFCs), and banks would be willing to give higher loans because their NPA will go down and their capital interest will be better.

“These measures will have an indirect effect on the entire sector including our company,” he further added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2020: Govt says scheme to provide subordinate debt to MSME entrepreneurs to be introduced

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Saturday said a scheme will be introduced to provide subordinate debt to MSME entrepreneurs.

The government has also asked the Reserve Bank to extend the Debt Restructuring window for micro, small and medium enterprises by a year to March 31, 2021, in measures aimed at imparting a thrust to the MSME sector, Finance Minister Nirmala Sitharaman said while presenting the Budget for 2020-21.

“An app-based invoice financing loans product will be launched. This will obviate the problem of delayed payments and consequential cash flow mismatches for the MSMEs”.

She said necessary amendments will be made to the Factor Regulation Act 2011 to enable non banking financial companies (NBFCs) to extend invoice financing to the MSMEs through TReDS thereby enhancing the economic and financial sustainability.

“Working capital credit remains a major issue for MSMEs. It is proposed to introduce a scheme to provide subordinate debt for entrepreneurs of MSMEs. This subordinate debt to be provided by banks would count as quasi equity and would be fully guaranteed through the Credit Guarantee Trust for the Medium and Small Entrepreneurs,” Sitharaman observed.

TReDS is an institutional mechanism to facilitate the trade receivable financing of micro, small and medium enterprises (MSMEs) from corporate buyers through multiple financiers.

Highlighting that more than five lakh MSMEs have permitted from restructuring of debt permitted by RBI in the last year, she said the restructuring window was to end on March 31, 2020 but the government has asked RBI to consider extending this window till March 31, 2021.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold loan & MFI industry faring well in current environment, says Manappuram Finance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IT was a strong show from Manappuram Finance as loan growth in the third quarter was the highest ever, while gold holdings too were at record levels. Loan growth was over 35 percent.

Discussing the outlook for the company going forward, VP Nandakumar, MD and CEO of Manappuram Finance said, “Our targeted growth in gold loan had been around 10-12 percent, the tonnage growth. In the three quarters, we could achieve a growth of 11 percent. In the last quarter we may be able to reach higher tonnage growth than these three quarters. We have been aided by the price increase of the gold, which has led to the volume growth to this level,” he said.

“The asset quality was maintained in these difficult hour for the non-banking financial companies (NBFCs) industry. Both gold loan industry and microfinance institutions (MFI) industry are faring better,” he said in an interview with CNBC-TV18.

On demand Nandakumar said, “Demand has also better in the last three quarters. So I hope in the last quarter as well demand may be maintained.”

In terms of asset quality in the non-gold space, he said,“The recovery is slightly less because of the natural calamities like floods in some places. In some districts of Karnataka, there are some political issues. Some local politicians interfere with the collections etc but the companies themselves are very confident of resolving it. If this is done, the collection may remain around 99 percent. So we don’t have much concerns about that.”

When asked if there is further scope for the deterioration in the asset quality for the MFI business, he replied they hoped the asset quality would improve since they had done few things to address the challenges they faced.  ” With all the measures, I don’t think the asset quality will deteriorate any further.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2020: Focus should be on job creation & capital market reforms, says HDFC’s Keki Mistry

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Keki Mistry, vice chairman and CEO, HDFC, one of the most definitive voices from India’s financial sector shared his views and expectations from the budget 2020.

“To my mind there should be 4 broad themes of the budget. The first should revolve around job creation. Housing is one of the biggest job creators in the economy, so we will talk about housing in a bit. The second area for the focus should be on capital market reforms. Third area of the focus should be on re-alignment of personal tax rates – particularly to my mind, the withdrawal of the high surcharge, which was introduced last year on high tax payers because that is slowing down consumption and the forth focus area should be the rural economy, these are the four broad focus areas,” he said.

With regards to real estate sector, he said, “The sector faces two issues. The first stuck projects. There are so many projects spread all over the country particularly in the big cities like Mumbai, Delhi, Bangalore, Chennai, Pune, which are 75-80 percent completed and not getting the last mile funding that is required to complete the project. We have to find a mechanism to ensure that these projects get the required funding, so that these projects get completed and all the home buyers who bought apartments in these projects get a house to stay in. Second issue is with regards to oversupply in the market and therefore how do we revive demand.”

Sharing his views on one-time restructuring for real estate projects, Mistry said, “Today under the regulations, if a loan is a non-performing loan (NPL) in someone’s books, then any fresh lender coming and providing funds to that project notwithstanding to the fact that new money could be completely safeguarded, completely ringfenced, properly secured and so and so forth – notwithstanding all of that – the new lender has to classify the loan as a non performing loan from day 1. In which case, nobody would want to lend money to a project.”

Therefore when a project is stuck, it is stuck forever. There are no lenders and there is nobody who will buy the apartment. We have to find a solution to this because there are hundreds of thousands of home buyers who have bought apartments in these projects, he added.

“My solution to this would be very simple – we should permit a one-time restructuring of such loans. So, if there is a one-time restructuring of such loans, let us say 3-6 months then new lenders can provide funding to that project with proper safeguard and security and ensure that it gets completed and the homebuyers gets the house which they have paid for. This was done in 2008-2009 very successfully and the whole real-estate sector revived as a result of that,” said Mistry.

Further focusing on housing, he said, “To improve demand, I would suggest, 3 or 4 things. One, the interest that is payable on a housing loan currently is tax deductible at the extent of Rs 2 lakh. We probably need to increase that limit to Rs 4 lakh or Rs 5 lakh and then link it to inflation. So, every year it keeps getting adjusted depending on what the inflation for the previous year was.”

“Two, the quantum of revenue that the government must be collecting on LTCG for real estate must be extremely limited after you consider the various deductions that are available but it results in a lot of administrative work from the perspective of someone who is planning to sell a house. So, I would suggest doing away with long term capital gains on sale of residential houses provided that the person has occupied that house for a minimum period of time. Let’s say 5 years – if you occupy the house for 5 years, you should not be required to pay any capital gains at the time of selling the property,” he said.

“Three, is with regards to rented property. Today, there is no demand for rented property. Nobody wants to buy a property with the idea of renting it out because of tax disadvantage. What happens is that in a rented property, the entire rent which is received is taxable. But the expense that you incur for earning the rent which is really the interest that is paid is not tax deductible and therefore the landlord ends up paying a large burden of tax. So, my suggestion is that the entire interest payable on a rented property should be tax deductible,” he further mentioned.

When asked if the National Investment and Infrastructure Fund (NIIF) limit of Rs 25,000 crore for the last mile funding needs to be expanded, he replied, “Let me compliment the government. I think it was a fantastic initiative on the part of the government to set up this fund. So full compliments to the government. However, at the end of the day what we must realize is that there are thousands of stuck projects all over the country and one fund, so how quickly it will able to dispense money to these thousands of projects after doing due diligence is something that we will have to wait and see.”

“So, along with the fund, we should also have one-time restructuring of real estate loans, which will enable lenders like banks, non-banking financial companies (NBFCs), housing finance companies (HFCs) with proper safeguards to lend money to these projects. I think the amount is sufficient. I don’t think we need to worry about the size of fund. That is more than adequate,” he stated.

Speaking about the additional liquidity window for HFCs and NBFCs, he said, “There are two issues around this, when IL&FS happened in September – first was the availability of funds and second was willingness on the part of banks to lend money to NBFCs or HFCs. The first part has been fully addressed by Reserve Bank of India (RBI), so full compliments to RBI for addressing the issue of liquidity. There is more than adequate or enough liquidity in the system and I don’t think that is a cause for concern at all.”

“Second issue is with regards to the willingness on part of banks to lend money to NBFCs, that risk averseness has not gone away. The good, strong NBFCs and HFCs get money with relative ease but the weaker and not so strong ones are finding it difficult to raise money. This issue needs to get addressed. It can be addressed if RBI sits with the bankers and tells them that, we strengthened the regulatory environment, you should now feel more confident to go and lend money to these NBFCs of HFCs, ” he said, adding that the other way to do it would be to set up a separate entity, which buys over these toxic assets of some of these NBFCs or HFCs, leaving behind assets, which are of better quality. If that is done, then the banks will again have the confidence to go and provide funds to the NBFC or the HFCs.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Prudent to be a stock picker than take broad sectoral call, says Sundaram Mutual Fund

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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S Krishna Kumar, CIO equity at Sundaram Mutual Fund is of the clear view that market has started discounting better quarter on quarter numbers along with some positive signs in the economy. Economic fundamentals are showing signs of recovery with improved production, improve throughput across factories. The consumer is also seen coming back and the non-banking financial companies (NBFCs) are on a much better wicket in terms of access to funds, interest rates etc.

Globally too, there is a lot of stability in terms of geopolitical tensions or trade war and things seem to be settling down, said Kumar in an interview with CNBC-TV18. “Liquidity is quite ample, globally rates are soft and purchasing managers index (PMIs) across the globe is also improving. It is all a very healthy sign,” he added.

“Emerging markets (EMs) in this time period would be a good outperformer and within that a story like India with a broad-based recovery is something that is interesting,” he said, adding that foreigners are quite actively participating in the Indian markets, which makes it a good story in the next one-two year timeframe.

Sector specific, talking about banks, Kumar said, “You are seeing a lot more broad-basing in terms of interest levels in various banks. However, there are some banks which have had very stable and steady growth over the many years and would continue to do well but at the same time, the relative outperformance would come from a lot of good quality beaten down names across the sectors in NBFCs etc., which are now bouncing back.”

“I think there is going to be a fairly strong shift that would play out where you see outperformance coming back to many NBFCs, which are now back in the game with access to capital and lower cost of funding,” he added.

On the retail side, consumption in pockets look weak but is broadly holding up pretty well, he said. So, going forward this year, one would see strong stories in consumer, retail, banking, NBFCs play out rather than a broader trend of outperformance that you saw earlier, he added.

“The way to go ahead in CY20 would be to pick best ideas across sectors and try to bet on them rather than to take a broader sectoral call,” he stated.

When asked about the cement space, he said, “First half of every calendar year, the sector does well because construction activity is at a peak during the summer months, and also the fact that right now infra spend is starting to pick up, a bit of construction activity is on the upswing  and industry capacity addition is slowing down.”

Slow capacity addition would result in supply tightness in the next six-twelve months, which in turn could augur well for the prices and help support cement sector valuations, said Kumar. The house would prefer to be very stock specific and play stocks which are more regional focused based on dynamics across different geographic regions than to take a broader sectoral call, he said.

When asked about his expectations from the budget 2020, he said,“The street is looking forward to a story from the budget – a story which is realistic, which acknowledges the fiscal strain and which talks about a path to get out of the fiscal strain through things like divestment, aggressive asset monetisation, improved climate for foreign direct investment (FDI) and supported by promise of making rural incomes better.”

“So, a combination of both fiscal push and ground level improvements on the rural income side would be appreciated. Income tax cuts, capital gains tax etc are good sentiment boosters but lot more needs to be done at the ground level for the masses,” said Kumar.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Infrastructure to be the new story for 2020, says Dimensions Corporate Finance Services

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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“Infrastructure will be the new story for the next year,” said Ajay Srivastava, CEO of Dimensions Corporate Finance Services, adding that the only worry is do we believe in their governance and is the governance a valuation overhang. That is what is stopping some from entering this space. There is nothing wrong with the companies, some of them have given dividend through the worst of the period, he added.

“I would believe, there is risk but the risk is not on economic fundamentals. The risk is on governance – that will there be a next income tax raid, will there be notice to the promoter for other things etc., that is what is clouding our mind more than just the economic fundamentals. Economic fundamentals wise, valuation wise, it is a clear buy. We are a buyer, we have bought infrastructure stocks little bit here and there but not too much,” Srivastava noted, adding that we had a lull and things are going to come back in a big way once the private sector comes into infra projects.

According to him, the Indian market has done reasonably well and so has the global markets. However, I don’t believe that the market has reconciled itself to a 4-5 percent growth trajectory.

With regards to midcaps, he said it is nice to see the euphoria in them but they come back to hit you when they stay in your portfolio for a longer time. “I still believe that the midcap stocks are not going to do well in the  market. If you have them, every rally is a place to get out, not get in. People who are getting in now in the midcap stocks, good luck to them. I don’t think in an economy of 4-5 percent growth revival, midcaps have hopes of great revival,” he said.

Speaking stock specific, he said , “The issue is when you talk to the investors and everybody else is that they are not worried for the short-term for these stocks like Avenue Supermarts and that is a good part about what is happening in terms of investment in these stocks. Money going into these stocks is long-term in nature. The structural money, which comes in locally is long-term money, globally it is arbitrage money. So to that extent, the bubble is based upon the fact that the low interest policy in the global market will continue and therefore we will see liquidity in these stocks.”

“Locally, the flight to quality continues. So, the context remains that of liquidity – while local liquidity wants safety, global liquidity wants liquidity in terms of stocks’ ability to get in and out. I think this disparity will continue,” said Srivastava.

In terms of cement sector, he said, “It is a very cyclical sector. I don’t find it as a comfort investment because it needs too much of a hardwork to track, for too little returns. Therefore, I would say that cement is a sector in which you have to be very active investor and not a passive one.”

On non-banking financial companies (NBFCs), he said, “I think it is too premature to get into that sector because the environment is so volatile, the regulatory framework is volatile. Recovery may have improved but I am not too sure whether that will continue for a long time to come and where they are going to get the new demand from.”

“According to us, NBFCs is not the place for putting your money. If you are there, don’t exit with the losses but for fresh money to go in, in second tier NBFCs is not the brightest of ideas when the biggies are fighting for market share,” he added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Problems not yet over for NBFCs, says market guru Mehraboon Irani

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mehraboon J Irani of Gini Gems Consultants  is of the view that the market is now reacting exactly the way it should have reacted for quite some time. It is looking out for opportunities in spaces and companies where there is not much of cloud of any kind. So, companies which have had its own share of controversies, the market is possibly trying to steer clear of them,” he said.

Talking stocks specific, Irani said, “Knowing what Zee has gone through, I would possibly like to refrain from talking positive or recommending the stock.”

On Sun TV, he said, “While there could be value but looking at the way the industry is right now, it is not a stock which I would recommend.”

With regards to the NBFC space, he said, “On the whole, the non-banking financial companies space has had its own share of trouble. Whatever we saw in the recent past with regards to stocks rebounding etc but the problems are not yet over for the space, he said, adding that I still believe that there would be few stocks in this space – which have done very well – may continue to do well and I would like to advise my investors and viewers to possibly go and continue to buy into them despite the fact that seemingly they may look very expensive. Maybe stocks like HDFC, Muthoot Finance, Manappuram Finance, Cholamandalam Investment and Finance Company are the top four.”

However, as far as others go they may have their own merits but we need to understand that they have gone through a lot, especially, after the IL&FS fiasco. Some of them could possibly be still suffering from the bruises and something more could possibly come. “In this climate, I would not like to possibly warrant a recommendation or suggest investors to go and buy into them right now,” he further mentioned.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow