Stock Fundamentals

NBFC stocks continue to fall

Radhika Merwin | Updated on October 03, 2018 Published on September 30, 2018

 

Stocks of NBFCs have been on a free-fall, ever since the IL&FS crisis unfolded. Commercial papers of Dewan Housing Finance Company that were sold at a sharp discount in the secondary market triggered the massive sell-off. This has raised a wider concern over the liquidity problem for NBFCs. The stock of Dewan Housing Finance Company continued to plummet, losing over 20 per cent last week. The rising concerns over liquidity crunch, impacting growth and profitability of NBFCs, have weighed on these stocks.

Given that many NBFCs have wide asset-liability mismatch, the concerns have exacerbated. Even if a full-fledged liquidity crisis does not unfold, the profitability of NBFCs may come under pressure, as their cost of funds will increase, impacting profitability. Given the sharp run-up in stock prices of NBFCs over the past two to three years, there could be more pain ahead for investors.

Read further by subscribing to

The Hindu Businessline

What You'll Get

  • Web + Mobile

    Access exclusive content of the Hindu Businessline across desktops, tablet and mobile device.


  • Exclusive portfolio stories and investment advice

    Gain exclusive market insights from the Hindu Businessline's research desk.


  • Ad free experience

    Experience cleaner site with zero ads and faster load times.


  • Personalised dashboard

    Customize your preference and get a personalized recommendation of stories based on your intrest.

This article is closed for comments.
Please Email the Editor