Trends in collections see solid improvement
According to Emkay Global, the recent discussions with various collection agencies indicate encouraging trends in collection and recoveries across portfolios and geographies despite the hiccups caused by recent lockdowns amid the second wave of Covid-19. Considering that the severity of lockdowns was relatively mild compared to last year, most businesses remained partly functional, witnessing only limited restrictions on movement of goods and services.
“Fully operational e-commerce channels have enabled even partial movement of non-essential items throughout this period, helping businesses take rather short time to ramp up activities and assume business-as-usual status,” the brokerage has said.
Superior recoveries in housing and secured products; vehicle loans remain mixed bag, the brokerage has said. Although collections for unsecured SME/business loans and consumer durable products hit some hard ground again, the credit cards segment is performing better as borrowers in general are preferring to hold liquidity. Vehicle finance segment remained the most vulnerable, with private cars and 2Ws seeing normalization in recoveries and CV and Passenger Vehicle (including cab aggregators) loans remaining under stress.
Although business recovery was halted during the second Covid wave, there is a built-in optimism for recovery playing out with the gradual unlocking and improvement in macros. We continue to like NBFCs with decent adequacy and diversified asset and liability mix.
5 Stocks to pick from the banking and financial services space
Emkay Global has placed a buy on the stock of housing finance major, HDFC with a price target of Rs 3,100. This is an almost 20% jump from the current levels. HDFC shares last closed at Rs 2,487 on the NSE.
2. Cholamandalam Investment
This is another share that has been recommended from the space, in the research report of the brokerage. It has set a price target of Rs 650 on the stock as against the current market price of Cholamandalam Investment of Rs 538. That again is a jump of nearly 20% from the current market price.
3. Shriram Transport Finance
According to Emkay Global, although business recovery was halted during the second Covid wave, there is a built-in optimism for recovery playing out with the gradual unlocking and improvement in macros.
It has recommended a “buy” on the stock of Shriram Transport Finance with a price target of Rs 1,680, as against the current market price of Rs 1,380.
4. Magma Fincorp
Magma Fincorp is an NBFC that provides car loans, SME loans, tractor loans etc. The brokerage is bullish on this NBFC stock as well and has set a price target of Rs 175, as against the prevailing market price of Rs 148. This again is a jump of almost 20% from the current market price.
5. Shriram City Union Finance
Shriram City Union Finance is another NBFC stock that is being recommended by the brokerage. The firm sees an upside target of Rs 1,950 on the stock, as against the current market price of 1,753.
The above mentioned stocks have been picked from brokerag report of Emkay Global. The author, the brokerage or Greynium Information Technologies do not take any responsibility for losses that maybe incurred. The above article is for informational purposes only. Please consult a professional advisor.