Some of the major Non-Banking Financial Companies (NBFCs) based in India witnessed a deep fall in their stock prices in Friday’s trading session after an important announcement made by the Reserve Bank of India (RBI) on November 16th, 2023.
RBI said that the ‘consumer credit’ exposure for banks as well as NBFCs, excluding education, housing, vehicle, and gold-backed loans, will be attracting a risk weight of 125 percent as compared to a risk weight of 100 percent earlier.
Moreover, the risk weight for ‘credit card loans’ by banks was raised from 125 percent to a risk weight of 150 percent.
A higher risk weight is generally interpreted as an increase in the amount of loan provisioning done by Banks thereby impacting the capital adequacy ratio (CAR) of lenders and compelling them to hike the interest rates on their products to curb the negative impact on the Return of Equity (RoE).
Analysts at CLSA and Citi have denoted an impact of up to 230 basis points (bps) in the CAR of Bajaj Finance. In addition, HDFC Bank, ICICI Bank, Axis Bank, and SBI, the rise in credit risk could impact the Common Equity Tier-1 (CET) ratio by 50 bps, 42 bps, 36 bps, and 27 bps, respectively.
For SBI Cards too, Analysts at CLSA have said that there could be a reduction in the Tier-1 capital by 415 bps.
Listed below are some of the major NBFC stocks based in India that have felt the heat due to the recent development mentioned above:
SBI Cards and Payment Services Limited
With a market capitalization of Rs 69,466.55 crores, the stocks of SBI Cards and Payment Services Limited opened their trading hour on Friday at Rs 744 and currently trades at Rs 731.35, slipping around 5.50 percent as compared to the previous close of Rs 772.20 apiece.
The company’s “unsecured” loan portfolio sums up to 100 percent of its total Assets Under Management (AUM).
L&T Finance Holdings Limited
With a market capitalization of Rs 35,404.49 crores, the stocks of L&T Finance Holdings Limited opened their trading hour on Friday at Rs 146.30 and currently trades at Rs 142.40, slipping around 5 percent as compared to the previous close of Rs 149.60 apiece.
The company’s “unsecured” loan portfolio sums up to 15.6 percent of its total Assets Under Management (AUM).
Cholamandalam Investment and Finance Company Limited
With a market capitalization of Rs 94,744.96 crores, the stocks of Cholamandalam Investment and Finance Company Limited opened their trading hour on Friday at Rs 1,141.70 and currently trades at Rs 1,128.55, slipping around 3.20 percent as compared to the previous close of Rs 1,165.05 apiece.
The company’s “unsecured” loan portfolio sums up to 30.6 percent of its total Assets Under Management (AUM).
Poonawalla Fincorp Limited
With a market capitalization of Rs 28,654.88 crores, the stocks of Poonawalla Fincorp Limited opened their trading hour on Friday at Rs 372.75 and currently trades at Rs 372.90, slipping around 2.90 percent as compared to the previous close of Rs 383.75 apiece.
Manappuram Finance Limited
With a market capitalization of Rs 13,263.63 crores, the stocks of Manappuram Finance Limited opened their trading hour on Friday at Rs 159.10 and currently trades at Rs 156.70, slipping around 2.30 percent as compared to the previous close of Rs 160.40 apiece.
Shriram Finance Limited
With a market capitalization of Rs 74,852.92 crores, the stocks of Shriram Finance Limited opened their trading hour on Friday at Rs 2,020.05 and currently trades at Rs 1,993.70, slipping around 2.10 percent as compared to the previous close of Rs 2,036 apiece.
The company’s “unsecured” loan portfolio sums up to 14.8 percent of its total Assets Under Management (AUM).
Bajaj Finance Limited
With a market capitalization of Rs 4.47 lakh crores, the stocks of Bajaj Finance Limited opened their trading hour on Friday at Rs 7,150 and currently trades at Rs 7,237.80, slipping around 1.80 percent as compared to the previous close of Rs 7,365.85 apiece.
Written by Amit Madnani
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