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Economic Times
30-07-2025
- Business
- Economic Times
Is Bajaj Finance's decline a sign of looming crisis in India's NBFC sector?
Mumbai: A precipitate post-earnings decline in the stock of Bajaj Finance, India's biggest, pure-play non-bank lender by market value, has underscored rising stress in hitherto bankable sectors served by such companies, with analysts looking to the festive season for most borrowers to generate the necessary cash flows that would boost both NBFC asset quality and collection efficiencies. ADVERTISEMENT "We are seeing pockets of stress emerging in sectors like micro finance, personal loans, cards and also micro-SME loans," said Anand Dama, head, BFSI Research at Emkay Global Financial Services. "It is still not led by macro indicators. We expect this stress to continue in the second and third quarters at least, and hope that it does not deteriorate with the macro slowdown, which is difficult to predict as of now." While a marked improvement in banking system liquidity since last autumn has theoretically lowered the cost of NBFC financing and eased the pressure on the liabilities side of their balance sheets, the industry faces fresh challenges from the asset side now. A sizable section of microfinance loans has turned into non-performing assets-both at banks and NBFCs-and collection efficiencies have been under the lens due to the suspect repayment ability of a section of challenges are being felt even by top NBFCs, such as Bajaj Finance, which helped millions of Indians step on to the consumption ladder for the first time over the past decade. In the post-results analyst call last week, Bajaj Finance MD Rajeev Jain said that 13 of the 17 industries the company tracks in the MSME sector are showing signs of a slowdown, while three others are showing signs of contraction. ADVERTISEMENT "So, it's virtually a perfect storm in a way. (Our) MSME portfolio is (about) ₹50,000 crore, which is entirely unsecured. In that, principally, (loans to) doctors is ₹15,000 crore. Even there, we are seeing pressure. So this segment did not trouble us even in Covid actually. This segment is also suddenly troubled. We ran that for 15 years. It has always been 99% current kind of portfolio," Jain Bajaj Finance stock has fallen more than 8% in a week, with about 6% coming on the day after the earnings on Friday. ADVERTISEMENT Jain added that within MSMEs, the problem is with the business loans, and Bajaj Finance is "going hammer and tongs" to ensure that loan repayments are at pre-Covid levels for MSME as well non-MSME loans. Even for L&T Finance, another large NBFC, asset quality deteriorated with gross stage 3 loans due past 90 days at 3.31% in June 2025 from 3.14% a year ago. As a result, impairment costs increased 39% year on year to ₹542 crore from ₹390 crore a year Sudipta Roy described it as a challenging quarter. ADVERTISEMENT But analysts caution that the troubles in the MSME sector are limited to unsecured loans."If you see bank loans to the sector which are largely secured, they are performing well. So it is not a sector phenomenon right now. ADVERTISEMENT These are companies with ₹10 crore to ₹15 crore turnover and business cycles go up and down. The festive season is crucial. If consumption recovers then we could see stress abate or things will become worse," said Bunty Chawla, analyst at IDBI Capital. Analysts said the second half of the fiscal remains crucial as macroeconomic conditions are heavily dependent on a good monsoon and festive spending to improve both demand for loans as well as asset quality. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
30-07-2025
- Business
- Time of India
Is Bajaj Finance's decline a sign of looming crisis in India's NBFC sector?
Live Events Agencies (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: A precipitate post-earnings decline in the stock of Bajaj Finance , India's biggest, pure-play non-bank lender by market value, has underscored rising stress in hitherto bankable sectors served by such companies, with analysts looking to the festive season for most borrowers to generate the necessary cash flows that would boost both NBFC asset quality and collection efficiencies."We are seeing pockets of stress emerging in sectors like micro finance, personal loans, cards and also micro-SME loans," said Anand Dama, head, BFSI Research at Emkay Global Financial Services "It is still not led by macro indicators. We expect this stress to continue in the second and third quarters at least, and hope that it does not deteriorate with the macro slowdown, which is difficult to predict as of now."While a marked improvement in banking system liquidity since last autumn has theoretically lowered the cost of NBFC financing and eased the pressure on the liabilities side of their balance sheets, the industry faces fresh challenges from the asset side now.A sizable section of microfinance loans has turned into non-performing assets-both at banks and NBFCs-and collection efficiencies have been under the lens due to the suspect repayment ability of a section of challenges are being felt even by top NBFCs, such as Bajaj Finance, which helped millions of Indians step on to the consumption ladder for the first time over the past decade. In the post-results analyst call last week, Bajaj Finance MD Rajeev Jain said that 13 of the 17 industries the company tracks in the MSME sector are showing signs of a slowdown, while three others are showing signs of contraction."So, it's virtually a perfect storm in a way. (Our) MSME portfolio is (about) ₹50,000 crore, which is entirely unsecured. In that, principally, (loans to) doctors is ₹15,000 crore. Even there, we are seeing pressure. So this segment did not trouble us even in Covid actually. This segment is also suddenly troubled. We ran that for 15 years. It has always been 99% current kind of portfolio," Jain Bajaj Finance stock has fallen more than 8% in a week, with about 6% coming on the day after the earnings on added that within MSMEs, the problem is with the business loans, and Bajaj Finance is "going hammer and tongs" to ensure that loan repayments are at pre-Covid levels for MSME as well non-MSME loans. Even for L&T Finance, another large NBFC, asset quality deteriorated with gross stage 3 loans due past 90 days at 3.31% in June 2025 from 3.14% a year ago. As a result, impairment costs increased 39% year on year to ₹542 crore from ₹390 crore a year Sudipta Roy described it as a challenging analysts caution that the troubles in the MSME sector are limited to unsecured loans."If you see bank loans to the sector which are largely secured, they are performing well. So it is not a sector phenomenon right are companies with ₹10 crore to ₹15 crore turnover and business cycles go up and down. The festive season is crucial. If consumption recovers then we could see stress abate or things will become worse," said Bunty Chawla, analyst at IDBI Capital. Analysts said the second half of the fiscal remains crucial as macroeconomic conditions are heavily dependent on a good monsoon and festive spending to improve both demand for loans as well as asset quality.
Mint
21-07-2025
- Business
- Mint
Yes Bank share price gains over 2% after Q1 results. Should you buy, sell or hold?
Yes Bank share price gained over 2% in early trade on Monday after the lender reported its Q1 results. Yes Bank shares rallied as much as 2.13% to ₹ 20.60 apiece on the BSE. Yes Bank reported a standalone net profit of ₹ 801 crore in the first quarter of FY26, registering a growth of 59% compared to ₹ 502 crore in the same quarter last year. The bank's net interest income (NII) in Q1FY26 increased by 5.7% year-on-year (YoY) to ₹ 2,371 crore, led by a fall in the cost of funds. Net interest margin (NIM) improved to 2.5%, while operating profit increased by 53.4% YoY to 1,358 crore. Asset quality during the June quarter remained stable, as Gross NPA and Net NPA remained unchanged sequentially at 1.6% and 0.3%, respectively. Provisions in Q1FY26 declined to ₹ 284 crore from ₹ 317 crore, QoQ. Anand Dama, Senior Research Analyst at Emkay Global Financial Services Ltd noted that Yes Bank's core performance remained weak, with credit growth slowing to 5% YoY and down 2.1% QoQ, while margins remained low at 2.5%. 'However, higher treasury gains led to an earnings beat. The bank expects NIM to slip in Q2 due to lending rate cuts. Yes's retail portfolio continues to exhibit stress with a slippage ratio of 2.5%, which we believe has led to management churn. The bank's CET 1 (~13.3%) is sub-par among peers, and would thus call for frequent dilution,' Dama said. Recently, SMBC agreed to acquire a 20% stake in Yes Bank from SBI (13.19% of the 24% sold) and other banks (6.81% of the total 9.7% stake sold) at a sale price of ₹ 21.5 per share (implying 1.3x FY27E ABV). However, the transaction is still pending RBI approval and so the bank has halted its search for a new CEO, he highlighted. Factoring in the Q1 beat, Emkay Global revises up FY26E EPS estimates by 5% and in turn its Yes Bank share price target by 6% to ₹ 17 apiece from ₹ 16. However, the brokerage firm retains a 'Sell' rating on Yes Bank shares, given sub-par growth, return ratios and higher valuations (1.2x FY27E ABV). At 9:30 AM, Yes Bank share price was trading 0.20% higher at ₹ 20.21 apiece on the BSE. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
17-06-2025
- Business
- Economic Times
J&K Bank will diversify loan mix in rest of India for stable growth: MD
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel KOLKATA: Private sector lender Jammu & Kashmir Bank, which has two-third of its business coming from the disruption-prone Kashmir valley, is attempting to diversify the loan mix in rest of India to build stability in business growth with a focus on building the housing and mid-corporate book, managing director Amitava Chatterjee told bank, in which the governments of union territories of Jammu & Kashmir and Ladakh hold a majority share with 59.4% interest, plans to reduce concentration risks."The new MD plans to firmly accelerate the business from rest of India with a clear focus on building the housing and mid-corporate book," Anand Dama, senior research analyst with Emkay Global Financial Services said on brokerage house had a meeting with the bank management to understand its long-term business plan and effect of the recent Pahalgam terror attack on tourists."We do have an aim to reduce the concentration risk and try to have a balanced growth from both the geographies, whether it is the rest of India or Jammu & Kashmir," Chatterjee told analysts in a post-earnings call held last who assumed charge on December 30 last year, said the Pahalgam terror attack had limited impact on its business as exposure to tourism-linked lending was less than 1% of the portfolio, which stood at Rs 1.07 lakh crore at the end of March."While Jammu & Kashmir will continue to receive our attention as it has been through the decades, we will try to balance it out with a better growth from the rest of India and that too not essentially from the corporate loan book," he said last bank is trying to improve retail lending like housing loans and car loans outside Kashmir.
Mint
21-04-2025
- Business
- Mint
HDFC Bank share price rallies over 2% to all-time high after strong Q4 results. Should you buy or sell?
HDFC Bank share price gained over 2% on Monday to hit a record high after the private sector lender reported strong Q4 results. HDFC Bank shares rallied as much as 2.27% to an all-time high of ₹ 1,950 apiece on the BSE. The largest private sector lender in the country, HDFC Bank reported a net profit of ₹ 17,616 crore in the fourth quarter of FY25, registering a growth of 6.7% year-on-year (YoY), while its net interest income (NII) increased 10.3% YoY to ₹ 32,070 crore. The bank's net interest margin (NIM) stood at 3.54% on total assets and 3.73% based on interest-earning assets. The bank's asset quality improved on a sequential basis. The board of HDFC Bank also recommended a dividend of ₹ 22 per share FY25. Analysts were impressed by HDFC Bank Q4 results, leading to increase in target prices on the stock by many brokerages. 'After growth calibration for the past one year, and under pressure to bring down LDR and manage PSL/margins, HDFC Bank reported better credit growth in 4Q at 5% YoY and 4% QoQ as well as stable core margins. We believe HDFC Bank would be the key beneficiary of the easing regulatory stance on LDR and liquidity which should reflect in better growth in FY26; this would thereby reduce the bank's growth gap with peers and thus ease investor concern,' said Anand Dama, Senior Research Analyst at Emkay Global Financial Services. He also believes that the listing of HDB Financial Services would unlock value, which should be a positive catalyst. Emkay Global retains a 'Buy' rating on HDFC Bank shares and raised the target price by 5% to ₹ 2,200 apiece. According to Nuvama Institutional Equities, HDFC Bank reported strong Q4FY25 earnings with a beat on core NIM, up 5 bps QoQ, and lower QoQ slippage. Core PPOP grew 10% YoY and 2% QoQ, while slippages decreased 15% QoQ. 'Management expects to maintain strong deposit growth even amid rate cuts and guides for smaller improvement in LDR versus FY25. We believe with positive outcomes on asset quality, gain in deposit market share, improving LDR and uptick in core NIM, Q4FY25 was strong,' said Nuvama Equities. The brokerage firm reiterated its 'Buy' rating and raised HDFC Bank share price target to ₹ 2,195, based on 2.8x BV FY26E, from ₹ 1,950 earlier. HDFC Bank, after breaching its all-time high post strong Q4 results, is witnessing vertical momentum, according to Anshul Jain, Head of Research at Lakshmishree Investment. 'However, HDFC Bank stock now looks overextended and a profit booking move towards the ₹ 1,850 – 1,860 zone is highly likely. HDFC Bank shares are trading well above its 10, 20, and 50-day EMAs (Exponential Moving Averages). Investors holding momentum longs are advised to book partial profits at current levels. A healthy pullback would offer better risk-reward for re-entry as the stock cools off from its stretched levels,' Jain said. HDFC Bank share price has gained 10% in one month and more than 18% in three months. Over the past one year, HDFC Bank shares have risen 27%, and have delivered a multibagger return of 110% in the past five years. At 9:55 AM, HDFC Bank shares were trading 1.22% higher at ₹ 1,929.80 apiece on the BSE.
