Zee Business Managing Editor has now delved deep into the space to see if stocks in the space are currently trading at attractive valuations after deciphering the good outlook for non-banking finance companies (NBFCS) against the backdrop of recent sudden reporate reductions and CRR reductions.
But before that, there is a summary of why he found NBFC as an attractive investment bet now
Why does Anil Singhvi consider NBFC to be the best sector to invest in now?
Anil Singhvi believes that after RBI cuts its repo rate, NBFC or non-bank financial institutions can secure loans at much lower rates.
Additionally, a 1% or 100 basis points reduction could take care of the system’s liquidity crisis and spur credit growth at a good rate.
Moreover, Singhvi finds the NBFC stock selection ratings very appealing. Importantly, the RBI is slowly and gradually removing and mitigating the various regulatory curbs of these NBFCs.
Experts add that some companies in the NBFC space can use from book value below 1 to price, while others do from price under 2 years of age.
NBFC Expert Decode Evaluation
According to Singhvi, big names in the space are traded at a reasonable valuation. Although stocks like ManappuramFinance and AB Capital say they are trading at a reasonable valuation, he concludes that the small names are trading at an attractive valuation.
Book value means the net assets of a company calculated by subtracting total liabilities from total assets. It essentially reflects the value there is for shareholders when the company has to be settled.
Book value
IIFL 1.4
AB Capital 2
L&T Fin 1.8
PEL 1
Manappuram 1.7
Therefore, stocks such as AB Capital and Manappuram Finance are traded at a book value of 1-2.
Small NBFCS LIK SG FINSERV, North Ark Trade in Attractive Review
Analysts determined that small businesses could use it with attractive ratings.
Book value
SG FINSERV 0.3
Fusion Micro 2.1
Indian Star 1.3
North Ark 1.0
Similarly, he found that PSU NBFCS also trades with good ratings
बुकैलैल
LIC Housing 0.9
PNB housing 1.7
Can House 2.1
