BackTwo NBFCs give returns better than FDs in just 1 day, rising over 13%. Do you own them?
Amidst a volatile market, demand for two NBFC stocks was skyrocketing. These two firms were MAS Financial Services and Mahindra Finance. These two stocks gave even better than FD returns in a span of just 1 day.
PremiumThe Indian markets were dangling around bears on Thursday amidst feeble global cues after US Federal Reserve's fourth 75 basis points rate hike. Sensex ended a little over the 60,800 level, while Nifty 50 held onto the over 18,000 mark. Banking stocks witnessed some buying, but could not offset the impact of selloffs in IT and auto stocks. However, amidst a volatile market, demand for two NBFC stocks was skyrocketing. These two firms were MAS Financial Services and Mahindra Finance. These two stocks gave even better than FD returns in a span of just 1 day. Currently, NBFCs and banks fixed deposit interest rates vary from 2.5% to 10%.
MAS Financial Services:
On BSE, Mas Financial shares closed at ₹903.15 apiece up by ₹104.30 or 13.06%. The stock even clocked a new 52-week high of ₹924.55 apiece during trading hours. The overall gains on Thursday were nearly 16% in this stock.
Riding on the bulls, the stock has jumped by over 23% in a year. The stock was around ₹734 apiece level on November 3 last year.
Compared to its 52-week low of ₹469.05 apiece which was recorded on February 2, 2022, the stock has now advanced by over 92.5% on BSE.
The upbeat performance in MAS Financial shares comes after the company recorded healthy Q2 earnings.
In Q2FY23, the company's PAT stood at ₹49.07 crore up by 28.04% yoy, and total income climbed by 46.73% yoy to ₹230.02 crore.
As of September 30, 2022, the company's asset under management (AUM) stood at ₹7,138.11 crore up by 30.13% yoy. The portfolio quality remained stable and strong despite the prolonged ongoing crisis followed by the unprecedented pandemic situation at 2.26% gross stage 3 assets and 1.60% net stage 3 assets of AUM as compared to 2.27% gross stage 3 assets and 1.63 % net stage 3 assets of AUM as of June 30, 2022.
On valuation and view, Motilal Oswal analysts in their report said, "MASFIN has successfully navigated a tough environment, with a large exposure to Microloans and the MSME sector. Disbursements and loan growth demonstrated healthy momentum, while asset quality is perhaps the best among its MFI and SME lending peers."
The stock brokerage's note added, "Historically, MASFIN has managed its liquidity well (with higher sell-downs) and still continues to have an adequate buffer on its Balance Sheet."
Mahindra & Mahindra Financial Services (Mahindra Finance):
Mahindra Finance soared by at least 14.5% on Thursday with an intraday high of ₹221.75 apiece on BSE. The stock ended near the day's high at ₹219.75 apiece higher by ₹26.15 or 13.51%.
Due to stellar buying, Mahindra Finance shares have climbed by 71.75% from their 52-week low of ₹127.95 apiece which was recorded on March 07, 2022. Meanwhile, in a year, the shares jumped by 12.5% from their level of nearly ₹195 on November 3 last year.
Mahindra Finance also saw massive buying after its Q2 results. The company recorded a 56.17% drop in standalone net profit to ₹448.33 crore in Q2FY23 compared to a profit of ₹1,022.90 crore in the same quarter last year. Sequentially, Q2 PAT soared by 101.11% from ₹222.92 crore in Q1 of FY23.
During Q2FY23, the NBFC's Net interest income stood at ₹1,540 crore up by 2% yoy, while total income stood at ₹2,609 crore higher by 3% yoy. Net interest margin (NIM) came in healthy at 7.5%.
According to Motilal Oswal's note, the company has maintained its leadership position in the Tractor and Mahindra UV financing segments, which has always been its strength. While MMFS has exhibited a volatile operating performance and weak asset quality in the past, the various strategic initiatives undertaken by the management, if executed correctly, have the potential to script a credible transformation.
Further, the stock brokerage's note added that a strong liability franchise and deep moats in rural and the semi-urban customer segment positions MMFS well to reap rewards of the hard work that is currently going into evolving this franchise.
As of now, Motilal has given a buy recommendation on both MAS Financial and Mahindra Finance.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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