INSUBCONTINENT EXCLUSIVE:
Mumbai: Non-banking and housing finance companies are likely to see slower loan and revenue growth going ahead, but these negatives are in
the price for most of these stocks, according to Morgan Stanley
Asset quality will be the key metric that will determine the future course for investors across wholesale and retail NBFCs, said Morgan
Stanley.
Housing Development Finance Corporation, Mahindra - Mahindra Financial Services and Shriram Transport Finance Corporation are the
top picks of Morgan Stanley
The investment bank said this is a one-year view with first quarter likely to be sluggish across NBFCs, especially auto financiers like
Mahindra - Mahindra Financial and Shriram Transport.
“For most NBFCs / HFCs this (slower loan and revenue growth) is driven by the slower
demand environment, as underscored by weak news flow around both auto sales and housing,” said Morgan Stanley.
The firm said slower growth
is already discounted in shares of auto financiers Shriram Transport and M- M Financial Services
Loan growth for HDFC and LIC Housing Finance is likely to be broadly steady in mid-teens in the April-June quarter, said Morgan
Stanley.
Shares of Shriram Transport have fallen 13.8% in the last one year while those of M-M Financial Services have declined 20% during
Shares of HDFC gained 15% in the last one year while those of LIC Housing Finance have gained 7.7% in the same period.
Morgan Stanley
expects net interest margins to moderate at most lenders in the first quarter due to delayed impact of higher funding costs
Asset quality trajectory will be the key element that will determine both the stock performance around the results and in the medium term,
